A genetic algorithm for a single product network design model with lead time and safety stock considerations |
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Authors: | Karthik Sourirajan Leyla Ozsen Reha Uzsoy |
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Affiliation: | 1. IBM TJ Watson Research Center, Department of Mathematical Sciences, 1101 Kitchawan Road, Route 134, Yorktown Heights, NY 10598, USA;2. Decision Sciences Department, College of Business, San Francisco State University, San Francisco, CA 94312, USA;3. Edward P. Fitts Department of Industrial and Systems Engineering, North Carolina State University, Raleigh, NC 27695, USA |
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Abstract: | We consider a two-stage supply chain with a production facility that replenishes a single product at retailers. The objective is to locate distribution centers in the network such that the sum of facility location, pipeline inventory, and safety stock costs is minimized. We explicitly model the relationship between the flows in the network, lead times, and safety stock levels. We use genetic algorithms to solve the model and compare their performance to that of a Lagrangian heuristic developed in earlier work. A novel chromosome representation that combines binary vectors with random keys provides solutions of similar quality to those from the Lagrangian heuristic. The model is then extended to incorporate arbitrary demand variance at the retailers. This modification destroys the structure upon which the Lagrangian heuristic is based, but is easily incorporated into the genetic algorithm. The genetic algorithm yields significantly better solutions than a greedy heuristic for this modification and has reasonable computational requirements. |
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Keywords: | Supply chain Network design Lead time Safety stock Genetic algorithm |
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