Scenario aggregation for supply chain quantity-flexibility contract

Gitae Kim and Chih-Hang Wu

International Journal of Systems Science, 2013, vol. 44, issue 11, 2166-2182

Abstract: In this research, we apply a scenario aggregation approach to solving the supply chain contract model formulated by two-stage stochastic programming problem. The supply chain contract can achieve the coordination between the buyer and the supplier. We formulate the stochastic programming model for a quantity-flexibility contract. The scenario aggregation method called the progressive hedging method is used to solve this problem. Experimental results show the convergence behaviour of the algorithm and the sensitivity of parameters.

Date: 2013
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DOI: 10.1080/00207721.2012.702237

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