Use of a Benders decomposition method for solving a two-echelon multi-commodity supply chain network design problem with stochastic demands

Tavakkoli-Moghaddam, Reza; Afsharinia, Zahra; Gholipour-Kanani, Yousof

Use of a Benders decomposition method for solving a two-echelon multi-commodity supply chain network design problem with stochastic demands

Document Type : Research Paper

Authors

Reza Tavakkoli-Moghaddam ¹

Zahra Afsharinia ²

Yousof Gholipour-Kanani ³

¹ Professor, Department of Industrial Engineering and Systems, University of Tehran

² Mazandaran University of Sciene and Tehnology

³ Islamic Azad University

Abstract

In this paper, a design problem for a two-echelon multi-commodity supply chain network with stochastic demands is taken into account. This network consists of production plants, warehouses and retailer (or final customers) in a single period. The problem considers strategic decisions (including location and capacities of production plants and warehouses) and operational decisions (including the transportation of commodities from the production plant to the warehouses and from warehouses to customers). Additionally, in this study, the demand is assumed to be stochastic and the given problem is modeled using a scenario-based stochastic programming approach. Specifically a two-stage stochastic programming model is presented to solve this problem. Furthermore, a Benders decomposition method is proposed in order to efficiently solve this problem. Finally, the conclusion is presented.

Keywords

Supply chain network design problem

Facility Location

Stochastic programming

Benders decomposition

Subjects