A NEW SUPPLY CHAIN NETWORK DESIGN MODEL WITH RISK-POOLING, LEAD TIME AND MULTI-ECHELON INVENTORY UNDER DEMAND UNCERTAINTY

 

Reza Tavakkoli-Moghaddam, Fatemeh Forouzanfar, Saeed Ebrahimnejad

 

Abstract

 

This paper addresses a problem of designing a multi-echelon supply chain with the single sourcing type and the related inventory systems, in which distribution centers are given. We also presents a novel mathematical model considering the risk-pooling, lead time, multi-echelon inventory under demand uncertainty, routing of vehicles from distribution centers (DCs) to customers in order to give services in a stochastic supply chain system, simultaneously. This problem is formulated as a non-linear integer programming model. Each customer demand is not known and it is under the control of the normal distribution. All the possible capacity levels are determined for distribution centers. The inventory existence of these centers can lead to a great success in reaching the risk-pooling advantage in order to overcome the variability of customer demands. The aim of this model is to determine the number of the located distribution centers, their locations and capacity levels, to allocate customers to distribution centers and distribution centers to suppliers. It is also to determine the net lead time of distribution centers and the inventory control decisions on the amount of products ordered and the amount of safety stocks at each opened DC. In addition, it is to determine the service time of every distribution center and routing decisions, such as determination of vehicles’ routes starting from an opened distribution center to serve its allocated customers and returning to that distribution center. All these are done in a way that the total system cost is minimized. Finally, the GAMS software is used to solve the presented model, and the computational results are illustrated.

 

Lecture Notes in Management Science (2011) Vol. 3: 387-396

3rd International Conference on Applied Operational Research, Proceedings

© Tadbir Operational Research Group Ltd. All rights reserved.

www.tadbir.ca

 

ISSN 2008-0050 (Print)

ISSN 1927-0097 (Online)

 

ARTICLE OUTLINE

 

·         Introduction

·         Problem Formulation

·         Problem Description

·         Model Formulation

·         Indices

·         Parameters

·         Binary Coefficients

·         Decision Variables

·         Solution Method

·         Conclusion

·         References

 

Full Text PDF