Title: A robust optimisation approach for designing a multi-echelon, multi-product, multi-period supply chain network with outsourcing

Authors: Samaneh Moradi; Mohamad Sadegh Sangari

Addresses: School of Industrial Engineering, College of Engineering, University of Tehran, P.O. Box 11155-45632, Tehran, Iran ' Department of Industrial and Systems Engineering, Fouman Faculty of Engineering, College of Engineering, University of Tehran, P.O. Box 43515-1155, Iran

Abstract: This paper addresses the problem of designing an integrated multi-echelon, multi-product, multi-period supply chain network under uncertainty in which products can be outsourced to improve responsiveness and the overall performance. The network consists of production plants, distribution centres and retailers. The demands of retailers, production capacities, and transportation costs as well as costs of opening distribution centres are subject to uncertainty. A deterministic mixed-integer linear programming (MILP) model is developed with the objective of minimising sum of the fixed, transportation, and outsourcing costs. In order to capture the uncertainties, a robust optimisation model is proposed. A set of numerical experiments using nominal and realisation data is investigated and the relative performance of the robust and deterministic models is compared based on the standard deviation and mean of the objective function values. In case of data realisation, results confirm that the proposed robust model outperforms the deterministic counterpart.

Keywords: supply chain network design; outsourcing; robust optimisation; mixed-integer linear programming; MILP.

DOI: 10.1504/IJLSM.2021.114759

International Journal of Logistics Systems and Management, 2021 Vol.38 No.4, pp.488 - 505

Received: 05 Feb 2019
Accepted: 26 May 2019
Published online: 05 May 2021 *

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