fyrirlestramaraÞon hr 2011 | ru lecture marathon 2011 amir azaron school of science and engineering...

FYRIRLESTRAMARAÞON HR 2011 | RU LECTURE MARATHON 2011

Amir AzaronSchool of Science and Engineering

Supply Chain Design under Uncertainty

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Supply Chain

• A Supply Chain is a network of suppliers, manufacturing plants, warehouses and distribution channels.

• It is organized to acquire raw materials, convert these raw materials to finished products and distribute these products to customers.

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Manufacturer

Manufacturer

Warehouse

Warehouse

Warehouse

WholesalerConsumer

Consumer

Consumer

Supply Chain Network

Supplier

Supplier

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Supply Chain Design Problem• Decision Variables

- Strategic decisions are dealing with the configuration of the supply chain or locations of facilities

- Tactical decisions are dealing with the amount of products to be produced and flows of materials.

• Constraints- Flows (min on demand nodes, flow conservation on

intermediate nodes, max on supply nodes).• SCD Problem Objective

- Simultaneously make Strategic and Tactical decisions to minimize the total costs.

We should also make decision in an environment where most model parameters such as demands, capacities, etc., are uncertain.

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Min

L

ll

Tll

Tll

Tll

T efzhxqpyc1

[Expected Total Cost]

Min

L

l

L

ll

Tll

Tll

Tlll

Tll

Tll

Tll efzhxqpefzhxqp

1

2

1

[Variance]

Min

L

lllup

1

[Financial Risk]

s.t. Bxl=0 l=1,…,L [Flow Conservation] Dxl+zl dl l=1,…,L [Meeting Demand]

Sxl ls l=1,…,L [Supply Limit] RxlMy+el l=1,…,L [Capacity Constraint] Oyel l=1,…,L [Capacity Expansion Limit] ll

Tll

Tll

Tl

T Vuefzhxqyc l=1,…,L [Rel. to Financial Risk]

PYy }1,0{ , LUu }1,0{ [Binary Variables]

,LKARx LKCRz

, LPRe [Continuous Variables]