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Build-to-order supply chain network design under supply and demand uncertainties

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  • Lin, Cheng-Chang
  • Wang, Tsai-Hsin
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    Abstract

    Supply chain disruptions are unintended, unwanted situations resulting in a negative supply chain performance. We study the supply chain network design under supply and demand uncertainty with embedded supply chain disruption mitigation strategies, postponement with downward substitution, centralized stocking and supplier sourcing base. We designed an integrated supply-side, manufacturing and demand-side operations network in such that the total expected operating cost is minimized. We modeled it in a deterministic equivalent formulation. An L-shaped decomposition with an additional decomposition step in the master problem is proposed. The computational results showed that parallel sourcing has a cost advantage against single sourcing under supply disruptions. In addition, the build-to-order (BTO) manufacturing mitigation process has its greatest impact with high variations on demands and is integrated with the component downward substitution. Lastly, the manufacturer needs to order differentiated components to cover its requirement for maximal product demand to prevent the loss of sale, even with fewer modules in stock.

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    Bibliographic Info

    Article provided by Elsevier in its journal Transportation Research Part B: Methodological.

    Volume (Year): 45 (2011)
    Issue (Month): 8 (September)
    Pages: 1162-1176

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    Handle: RePEc:eee:transb:v:45:y:2011:i:8:p:1162-1176

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    Related research

    Keywords: Supply chain network design Postponement Build-to-order Supply disruption Uncertain demand;

    References

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    1. Santoso, Tjendera & Ahmed, Shabbir & Goetschalckx, Marc & Shapiro, Alexander, 2005. "A stochastic programming approach for supply chain network design under uncertainty," European Journal of Operational Research, Elsevier, vol. 167(1), pages 96-115, November.
    2. Kathryn E. Stecke & Xuying Zhao, 2007. "Production and Transportation Integration for a Make-to-Order Manufacturing Company with a Commit-to-Delivery Business Mode," Manufacturing & Service Operations Management, INFORMS, vol. 9(2), pages 206-224, September.
    3. Sch├╝tz, Peter & Tomasgard, Asgeir & Ahmed, Shabbir, 2009. "Supply chain design under uncertainty using sample average approximation and dual decomposition," European Journal of Operational Research, Elsevier, vol. 199(2), pages 409-419, December.
    4. Gunasekaran, Angappa & Ngai, Eric W.T., 2009. "Modeling and analysis of build-to-order supply chains," European Journal of Operational Research, Elsevier, vol. 195(2), pages 319-334, June.
    5. Burke, Gerard J. & Carrillo, Janice E. & Vakharia, Asoo J., 2007. "Single versus multiple supplier sourcing strategies," European Journal of Operational Research, Elsevier, vol. 182(1), pages 95-112, October.
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    Cited by:
    1. Baghalian, Atefeh & Rezapour, Shabnam & Farahani, Reza Zanjirani, 2013. "Robust supply chain network design with service level against disruptions and demand uncertainties: A real-life case," European Journal of Operational Research, Elsevier, vol. 227(1), pages 199-215.
    2. Farahani, Reza Zanjirani & Rezapour, Shabnam & Drezner, Tammy & Fallah, Samira, 2014. "Competitive supply chain network design: An overview of classifications, models, solution techniques and applications," Omega, Elsevier, vol. 45(C), pages 92-118.
    3. Lin, Cheng-Chang & Wu, Yi-Chen, 2013. "Optimal pricing for build-to-order supply chain design under price-dependent stochastic demand," Transportation Research Part B: Methodological, Elsevier, vol. 56(C), pages 31-49.
    4. Wang, Xiaolei & Ouyang, Yanfeng & Yang, Hai & Bai, Yun, 2013. "Optimal biofuel supply chain design under consumption mandates with renewable identification numbers," Transportation Research Part B: Methodological, Elsevier, vol. 57(C), pages 158-171.

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