Economics at your fingertips  

Robust bi-level optimization for an opportunistic supply chain network design problem in an uncertain and risky environment

Hêris Golpîra ()

Operations Research and Decisions, 2017, vol. 1, 21-41

Abstract: This paper introduces the problem of designing a single-product supply chain network in an agile manufacturing setting under a Vendor Managed Inventory (VMI) strategy to seize a new market opportunity. The problem addresses the level of risk aversion of the retailer when dealing with the uncertainty of market related information through a Conditional Value at Risk (CVaR) approach. This approach leads to a bi-level programming problem. The Karush-Kuhn-Tucker (KKT) conditions are employed to transform the model into a single-level, mixed-integer linear programming problem by considering some relaxations. Since realizations of imprecisely known parameters are the only information available, a data-driven approach is employed as a suitable, more practical, methodology of avoiding distributional assumptions. Finally, the effectiveness of the proposed model is demonstrated through a numerical example.

Keywords: Supply chain management; production-distribution planning; conditional value at risk; Bi-level programming; robust optimization; KKT conditions. (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations Track citations by RSS feed

Downloads: (external link) (application/pdf)

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:

Access Statistics for this article

More articles in Operations Research and Decisions from Wroclaw University of Technology, Institute of Organization and Management Contact information at EDIRC.
Series data maintained by Piotr Wawrzynowski ().

Page updated 2017-09-29
Handle: RePEc:wut:journl:v:1:y:2017:p:21-41:id:1267