A Benders Decomposition Method for Designing Reliable Supply Chain Networks Accounting for Multimitigation Strategies and Demand Losses

Nader Azad () and Elkafi Hassini ()
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Nader Azad: Faculty of Business and Information Technology, University of Ontario Institute of Technology, Oshawa, Ontario L1H 7K4, Canada
Elkafi Hassini: DeGroote School of Business, McMaster University, Hamilton, Ontario L8S 4M4, Canada

Transportation Science, 2019, vol. 53, issue 5, 1287–1312

Abstract: This paper investigates the design of reliable supply networks to make them resilient to unpredictable disruptions. We develop an optimization model that incorporates several features, including (1) partial failure of facilities (instead of complete shutdown) resulting in interrupted supply capacity, (2) the effect of disruption on customer demand, and (3) the possibility to use multistrategies to mitigate disruption. We formulate a mixed-integer linear programming model to determine the optimal location of facilities and assignment of customers to opened facilities. An accelerated Benders decomposition method with valid inequalities is proposed to solve the problem. We discuss the computational efficiency of this decomposition procedure using two case studies as well as randomized data. For medium- and large-sized instances, our approach can decrease computational times by as much as 60% on average. We analyze the effect of multimitigation policies on the optimal solution and the model performance. Compared with the existing single-mitigation strategy models, we find that our model reduces the need for redundancy by as much as 50% and improves the total cost by as much as 8% in our case studies.

Keywords: reliable supply chain; disruption risks; disruption mitigation strategies; Benders decomposition (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (12)

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Persistent link: https://EconPapers.repec.org/RePEc:inm:ortrsc:v:53:y:2019:i:5:p:1287-1312

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