A case study on sample average approximation method for stochastic supply chain network design problem

Yuan WANG , Ruyan SHOU , Loo Hay LEE , Ek Peng CHEW

Front. Eng ›› 2017, Vol. 4 ›› Issue (3) : 338 -347.

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Front. Eng ›› 2017, Vol. 4 ›› Issue (3) : 338 -347. DOI: 10.15302/J-FEM-2017032
RESEARCH ARTICLE
RESEARCH ARTICLE

A case study on sample average approximation method for stochastic supply chain network design problem

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Abstract

This study aims to solve a typical long-term strategic decision problem on supply chain network design with consideration to uncertain demands. Existing methods for these problems are either deterministic or limited in scale. We analyze the impact of uncertainty on demand based on actual large data from industrial companies. Deterministic equivalent model with nonanticipativity constraints, branch-and-fix coordination, sample average approximation (SAA) with Bayesian bootstrap, and Latin hypercube sampling were adopted to analyze stochastic demands. A computational study of supply chain network with front-ends in Europe and back-ends in Asia is presented to highlight the importance of stochastic factors in these problems and the efficiency of our proposed solution approach.

Keywords

supply chain network / stochastic demand / sampling average approximation / Bayesian bootstrap / Latin hypercube sampling

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Yuan WANG, Ruyan SHOU, Loo Hay LEE, Ek Peng CHEW. A case study on sample average approximation method for stochastic supply chain network design problem. Front. Eng, 2017, 4(3): 338-347 DOI:10.15302/J-FEM-2017032

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RIGHTS & PERMISSIONS

The Author(s) 2017. Published by Higher Education Press. This is an open access article under the CC BY license (http://creativecommons.org/licenses/by/4.0)

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