Multi-objective Robust Operation Model for a Supply Chain with Market Demands and Raw Material Price Uncertainty
In this paper, the operation of a multi-product and multi-period supply chain involving one producer and one supplier with uncertain market demands and raw material price is considered. With variations in the market demands and raw material price describe
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Multi-objective Robust Operation Model for a Supply Chain with Market Demands and Raw Material Price Uncertainty Li-ping Yu, Li-jun Li, and Xiao-yuan Huang
Abstract In this paper, the operation of a multi-product and multi-period supply chain involving one producer and one supplier with uncertain market demands and raw material price is considered. With variations in the market demands and raw material price described by using an interval uncertainty method, a multi-objective robust optimization model is established using a robust linear programming approach. A numerical example is used to verify the proposed model, and the optimum robust operating strategy is determined for worst case supply chain conditions during an uncertain market demands and raw material price. When robust measures are adopted in the objectives of supply chain coordination and profit was maximized for all participants, the effect of market demands and raw material price uncertainty on objective values decreased significantly. Keywords Objective programming • Raw material price • Robust optimization • Supply chain operation • Uncertainty
11.1 Introduction In supply chain, logistics and information flow can form a complex network for many suppliers, manufacturers and distributors to interconnect each other (Lee and Billington 1993). Supply chain itself with uncertainty of the dynamic properties, such as customer needs, the raw material supply, production capacity, transportation time, manufacturing time, cost, quality, payment date (limit payment time), priority, lost information, and fuzzy information and the bullwhip effect, etc. (Lee and Billington 1993; Davis 1993; Arns et al. 2002; Geary et al. 2002; Kouvelis and
L. Yu () • L. Li • X. Huang School of Business Administration, Northeastern University, Shenyang, China e-mail: [email protected] E. Qi et al. (eds.), The 19th International Conference on Industrial Engineering and Engineering Management, DOI 10.1007/978-3-642-37270-4 11, © Springer-Verlag Berlin Heidelberg 2013
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Milner 2002). Changes in the economy will increase the uncertainty of the supply chain operation process and uncertain parameters can through the supply chain network transmission (Van der Vorst and Beulens 2002), increase the difficulty to establish the model for the supply chain, which is much more challenging. At present, there are numerous researches on uncertain environment of supply chain operation. It stress future supply chain management must respond to the demand uncertainty (Christopher and Towill 2002). It established multi-objective optimization model for the many members supply chain with uncertain product demand and prices (Cheng-Liang and Wen-Cheng 2004). It proposes short life cycle of the products coordinated order decisions with delivery time and demand uncertainty (Kevin Weng and McClurg 2003). It researches the optimal control problem for the supply chain with uncertain requirements (Dimitris and Aurelie 2006). In this paper, a multi-objective robust optimization model w
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