(380e) Supply Chain Optimization for Efficiency and Robustness Objectives

A supply chain is defined as a network of facilities that perform the functions of procurement of materials, transformation of these materials into intermediate and finished products, and distribution of these products to the customers [1]. Supply chains comprise suppliers, producers, warehouses, and customers. A common objective in the design of a supply chain is the maximization of profit while satisfying constraints in supply and transportation, termed the efficiency objective. Another objective, the resistance of the supply chain to shocks and fluctuations, both natural and manmade [2], has emerged recently [3]. However, there is little work done on optimizing the supply chain with both the efficiency and robustness objectives.

In our work, we extended previous work on network structural efficiency and robustness [4, 5] to propose a topology-driven framework for supply network optimization. Fixed and operational costs, as well as the expected consequence of disruption under various failure scenarios [6] were considered. The proposed method may be applied in process industries which make use of multiple raw materials and are subject to supply failure.

References

1. Tsiakis P, Shah N and. Pantelides CC (2001) Design of multi-echelon supply networks under demand uncertainty Industrial and Engineering Chemistry Research 40 3585-3604

2. Chopra S and Sodhi M (2004) Managing risk to avoid supply-chain breakdown MIT Sloan Management Review 46 1 53?61

3. Snyder LV, Scaparra PM, Daskin MS and Church RL (2005) Planning for Disruptions in Supply Chain Networks Tutorials on Operations Research 1-23

4. Venkatasubramanian V, Katare S, Patkar PR and Mu F (2004) Spontaneous emergence of complex optimal networks through evolutionary adaptation Computers and Chemical Engineering 28 9 1789-1798

5. Meepetchdee Y and Shah N (2007) Logistical network design with robustness and complexity considerations International Journal of Physical Distribution and Logistics Management 37 3 201-222

6. Eppen G. D., Martin R. K. and Schrage L. (1989) A Scenario Based Approach to Capacity Planning Operations Research 37 517-527