Towards optimal configuration of a manufacturer’s supply network with demand flexibility

L.X. Cui

International Journal of Production Research, 2015, vol. 53, issue 12, 3541-3560

Abstract: Demand flexibility exhibits the degree to which customers are often willing to compromise on product features or performance levels for budgetary (reflected in price) or schedule (reflected in delivery) reasons. It is essential for a manufacturer to map demand flexibility into the supply side and investigate its impact on supply network configuration to maximise its total profit. This paper is among the first contributions that seek to address the challenge of optimal configuration of a manufacturer’s supply network that consists of raw material suppliers and contract manufacturers, considering demand flexibility and commonality among different product families. A new mixed integer programming model is developed to describe the characteristics of this problem. The objective was to maximise the manufacturer’s total profit subject to various operating constraints of the supply chain. In view of the complexity and non-deterministic polynomial-time (NP)-hard nature of the problem, a hybrid constraint programming and simulated annealing algorithm is proposed to solve the problem optimally. Extensive numerical studies are conducted to validate the effectiveness of the proposed model and the hybrid algorithm.

Date: 2015
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DOI: 10.1080/00207543.2014.980011

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