A two-stage stochastic programming method for designing multi-stage global supply chains with stochastic demand

Behnaz Saboonchi and Guoqing Zhang

International Journal of Operational Research, 2010, vol. 9, issue 4, 409-425

Abstract: This paper encompasses the design of a multi-stage global supply chain with stochastic demand. The network consists of manufacturing sites, distribution centres and retail zones situated at both domestic and international locations. Tactical level decisions to be made are the selection of international outsourcing partners, transportation modes and the capacity of each facility. To provide a practical decision support tool for the design of global supply chains, we consider the existence of exchange rate variations and the presence of economies of scale in production which lead to different capacity expansion and outsourcing policies. We formulate the problem as a mixed-integer programming (MIP) model with the objective of minimising the overall costs and maximising the expected average service level. A two-stage stochastic programming method is used to handle the stochasticity in demand. Finally, the proposed model is applied to various cases to demonstrate its applicability in facilitating decision making for managers.

Keywords: global supply chains; supply chain management; SCM; stochastic programming; mixed-integer programming; supply chain design; multi-stage supply chains; stochastic demand; selection; outsourcing partners; decision making; exchange rate variations; economies of scale; capacity expansion; transport modes; facility capacity; decision support systems; DSS; overall costs; average service levels. (search for similar items in EconPapers)
Date: 2010
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.inderscience.com/link.php?id=36289 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ids:ijores:v:9:y:2010:i:4:p:409-425

Access Statistics for this article

More articles in International Journal of Operational Research from Inderscience Enterprises Ltd
Bibliographic data for series maintained by Sarah Parker ().