A Supply Chain Design Model With Unreliable Supply.pdfVIP

A Supply Chain Design Model With Unreliable Supply Lian Qi,1 Zuo-Jun Max Shen2 1 Department of Business Administration, University of Missouri, Rolla, Missouri 2 Department of Industrial Engineering and Operations Research, University of California, Berkeley, California Received 6 August 2006; revised 19 June 2007; accepted 30 June 2007 DOI 10.1002/nav.20255 Published online 17 August 2007 in Wiley InterScience . Abstract: Uncertainties abound within a supply chain and have big impacts on its performance. We propose an integrated model for a three-tiered supply chain network with one supplier, one or more facilities and retailers. This model takes into consideration the unreliable aspects of a supply chain. The properties of the optimal solution to the model are analyzed to reveal the impacts of supply uncertainty on supply chain design decisions. We also propose a general solution algorithm for this model. Computational experience is presented and discussed. ? 2007 Wiley Periodicals, Inc. Naval Research Logistics 54: 829–844, 2007 Keywords: supply chain design; disruption; nonlinear optimization 1. INTRODUCTION of ?nal product delivered on time to a retailer may not be exactly the amount requested. This is because of the quality A supply chain network is a complex system where many issues resulting from different production/assembly capabili- uncertainties exist, such as customer demands, yields of the ties in different facilities, mistakes made during the assembly/ suppliers, and defect rates of the products. Since most sup- packaging operations, and damages caused by loading and ply chain design decisions for example, facility location transportation. Most research in the supply chain design lit- are very expensive to change, it is not reasonable to use erature ignores this portion of loss, or simply uses a constant deterministic parameters to describe these uncertainties when parameter instead of a random variable to model it. We m