Opportunistic supply chain formation from qualified partners for a new market demand

S S Chauhan, Proth J-M, A M Sarmiento and R Nagi ()
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S S Chauhan: INRIA-SAGEP, Ile du Saulcy - 57045
Proth J-M: INRIA-SAGEP, Ile du Saulcy - 57045
A M Sarmiento: University at Buffalo (SUNY)
R Nagi: University at Buffalo (SUNY)

Journal of the Operational Research Society, 2006, vol. 57, issue 9, 1089-1099

Abstract: Abstract This paper addresses the problem of short-term supply chain design using the idle capacities of qualified partners in order to seize a new market opportunity. The new market opportunity is characterized by a deterministic forecast over a planning horizon. The production–distribution process is assumed to be organized in stages or echelons, and each echelon may have several qualified partners willing to participate. Partners within the echelon may differ in idle production capacity, operational cost, storage cost, etc, and we assume that idle capacity may be different from one period to another period. The objective is to design a supply chain by selecting one partner from each echelon to meet the forecasted demand without backlog and best possible production and logistics costs over the given planning horizon. The overall problem is formulated as a large mixed integer linear programming problem. We develop a decomposition-based solution approach that is capable of overcoming the complexity and dimensionality associated with the problem. Numerical results are presented to support the effectiveness of this approach.

Keywords: supply chain formation; qualified partners; heuristics (search for similar items in EconPapers)
Date: 2006
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Citations: View citations in EconPapers (3)

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DOI: 10.1057/palgrave.jors.2602075

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