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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

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.

Suggested Citation

  • Lin, Cheng-Chang & Wang, Tsai-Hsin, 2011. "Build-to-order supply chain network design under supply and demand uncertainties," Transportation Research Part B: Methodological, Elsevier, vol. 45(8), pages 1162-1176, September.
    • Handle: RePEc:eee:transb:v:45:y:2011:i:8:p:1162-1176
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    References listed on IDEAS

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    14. Qi, Mingyao & Yang, Ying & Cheng, Chun, 2023. "Location and inventory pre-positioning problem under uncertainty," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 177(C).
    15. Masoud Esmaeilikia & Behnam Fahimnia & Joeseph Sarkis & Kannan Govindan & Arun Kumar & John Mo, 2016. "A tactical supply chain planning model with multiple flexibility options: an empirical evaluation," Annals of Operations Research, Springer, vol. 244(2), pages 429-454, September.
    16. Jahani, Hamed & Abbasi, Babak & Sheu, Jiuh-Biing & Klibi, Walid, 2024. "Supply chain network design with financial considerations: A comprehensive review," European Journal of Operational Research, Elsevier, vol. 312(3), pages 799-839.
    17. Mingqiang Yin & Min Huang & Xiaohu Qian & Dazhi Wang & Xingwei Wang & Loo Hay Lee, 2023. "Fourth-party logistics network design with service time constraint under stochastic demand," Journal of Intelligent Manufacturing, Springer, vol. 34(3), pages 1203-1227, March.
    18. Khouloud Dorgham & Issam Nouaouri & Jean-Christophe Nicolas & Gilles Goncalves, 2022. "Collaborative hospital supply chain network design problem under uncertainty," Operational Research, Springer, vol. 22(5), pages 4607-4640, November.
    19. Jahani, Hamed & Abbasi, Babak & Alavifard, Farzad & Talluri, Srinivas, 2018. "Supply chain network redesign with demand and price uncertainty," International Journal of Production Economics, Elsevier, vol. 205(C), pages 287-312.
    20. Cagri Gurbuz, Mustafa & Yurt, Oznur & Ozdemir, Sena & Sena, Vania & Yu, Wantao, 2023. "Global supply chains risks and COVID-19: Supply chain structure as a mitigating strategy for small and medium-sized enterprises," Journal of Business Research, Elsevier, vol. 155(PB).
    21. Aldrighetti, Riccardo & Battini, Daria & Ivanov, Dmitry & Zennaro, Ilenia, 2021. "Costs of resilience and disruptions in supply chain network design models: A review and future research directions," International Journal of Production Economics, Elsevier, vol. 235(C).
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