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An approach for strategic supply chain planning under uncertainty based on stochastic 0-1 programming

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Alonso-Ayuso, A. and Escudero, Laureano F. and Garín, A. and Ortuño, M. Teresa and Pérez, G. (2003) An approach for strategic supply chain planning under uncertainty based on stochastic 0-1 programming. Journal of Global Optimization, 26 (1). pp. 97-124. ISSN 0925-5001

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Abstract

We present a two-stage stochastic 0-1 modeling and a related algorithmic approach for Supply Chain Management under uncertainty, whose goal consists of determining the production topology, plant sizing, product selection, product allocation among plants and vendor selection for raw materials. The objective is the maximization of the expected benefit given by the product net profit over the time horizon minus the investment depreciation and operations costs. The main uncertain parameters are the product net price and demand, the raw material supply cost and the production cost. The first stage is included by the strategic decisions. The second stage is included by the tactical decisions. A tight 0-1 model for the deterministic version is presented. A splitting variable mathematical representation via scenario is presented for the stochastic version of the model. A two-stage version of a Branch and Fix Coordination (BFC) algorithmic approach is proposed for stochastic 0-1 program solving, and some computational experience is reported for cases with dozens of thousands of constraints and continuous variables and hundreds of 0-1 variables.


Item Type:Article
Uncontrolled Keywords:Supply chain; BoM; Plant sizing; Vendor selection; Strategic planning; Two-stage stochastic; Splitting variable; Branch-and-fix coordination; Flow management problem; Integer programs; Linear-programs; Recourse; Decomposition; Algorithms; Systems; Models
Subjects:Sciences > Mathematics > Operations research
ID Code:17535
Deposited On:21 Dec 2012 11:25
Last Modified:12 Dec 2018 15:07

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