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Supply Chain Design under Uncertainty Amir Azaron School of Science and Engineering FYRIRLESTRAMARAÞON HR 2011 | RU LECTURE MARATHON 2011 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. www.hr.is Supply Chain Network Supplier Warehouse Consumer Wholesaler Manufacturer Warehouse Consumer Manufacturer Supplier Warehouse Consumer www.hr.is 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. www.hr.is L Min c y pl qlT xl hlT z l f lT el T [Expected Total Cost] l 1 T T T T T T pl ql xl hl zl f l el pl ql xl hl zl f l el l 1 l 1 L Min L 2 [Variance] L Min pu l 1 [Financial Risk] l l s.t. Bxl=0 l=1,…,L Dxl+zl dl l=1,…,L Sxl sl l=1,…,L Rxl My+el l=1,…,L l=1,…,L el Oy [Flow Conservation] [Meeting Demand] [Supply Limit] [Capacity Constraint] [Capacity Expansion Limit] c T y qlT xl hlT z l f lT el Vul P y Y {0,1} , u U {0,1}L A K L x R C K L , z R l=1,…,L [Rel. to Financial Risk] [Binary Variables] P L , e R www.hr.is [Continuous Variables]