1 research outputs found
Reliable design of an integrated supply chain with expedited shipments under disruption risks
This paper proposes a mathematical model for the design of a two-echelon
supply chain where a set of suppliers serve a set of terminal facilities that
receive uncertain customer demands. This model integrates a number of system
decisions in both the planning and operational stages, including facility
location, multi-level service assignments, multi-modal transportation
configuration, and inventory management. In particular, we consider
probabilistic supplier disruptions that may halt product supply from certain
suppliers from time to time. To mitigate the impact from supplier disruptions,
a terminal facility may be assigned to multiple supplies that back up each
other with different service priorities. With such multi-level service
assignments, even when some suppliers are disrupted, a facility may still be
supplied by the remaining functioning suppliers. Expensive expedited shipments
yet with assured fast delivery may be used in complement to less expensive
regular shipments yet with uncertain long lead times. Combining these two
shipment modes can better leverage the inventory management against uncertain
demands. We formulate this problem into a mix-integer nonlinear program that
simultaneously determines all these interdependent system decisions to minimize
the expected system cost under uncertainties from both suppliers and demands. A
customized solution algorithm based on the Lagrangian relaxation is developed
to efficiently solve this model. Several numerical examples are conduced to
test the proposed model and draw managerial insights into how the key
parameters affect the optimal system design.Comment: 24 pages, 4 figure