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Robust supply chain network design with service level against disruptions and demand uncertainties: A real-life case
Authors:Atefeh Baghalian  Shabnam Rezapour  Reza Zanjirani Farahani
Institution:1. Industrial Engineering Department, Urmia University of Technology, Urmia, Iran;2. Department of Informatics and Operations Management, Kingston Business School, Kingston University, UK;3. The School of Industrial and System Engineering, The University of Oklahoma, Norman, OK, USA
Abstract:We have developed a stochastic mathematical formulation for designing a network of multi-product supply chains comprising several capacitated production facilities, distribution centres and retailers in markets under uncertainty. This model considers demand-side and supply-side uncertainties simultaneously, which makes it more realistic in comparison to models in the existing literature. In this model, we consider a discrete set as potential locations of distribution centres and retailing outlets and investigate the impact of strategic facility location decisions on the operational inventory and shipment decisions of the supply chain. We use a path-based formulation that helps us to consider supply-side uncertainties that are possible disruptions in manufacturers, distribution centres and their connecting links. The resultant model, which incorporates the cut-set concept in reliability theory and also the robust optimisation concept, is a mixed integer nonlinear problem. To solve the model to attain global optimality, we have created a transformation based on the piecewise linearisation method. Finally, we illustrate the model outputs and discuss the results through several numerical examples, including a real-life case study from the agri-food industry.
Keywords:Supply chain network  Risk analysis  Disruption  Robust optimisation  Agri-food
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