Supply chain optimization in context of production flow network

Abstract

For large multinational companies, the complex production process of their finished goods usually contains plenty of stages, which constitute a production flow network. Each production stage in the production flow network can be undertaken by one or more suppliers. This study proposes a stochastic programming model for the production flow network oriented supply chain network design problem, which optimizes the decision of allocating stages to suppliers with the objective of minimizing the total expected costs of production and transportation among suppliers under uncertain demands of customers. A local branching based solution method is developed to solve the model. A case study on applying this model to a large automobile company is performed. In addition, some numerical experiments are conducted to validate the effectiveness of the proposed model and the efficiency of the proposed solution method.

Keywords

Supply chain network / production / allocation / stochastic programming

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