TY - JOUR
T1 - Redesign of a supply network by considering stochastic demand
AU - Paz, Juan Camilo
AU - Orozco, Julián Andrés
AU - Salinas, Jaime Mauricio
AU - Buriticá, Nicolás Clavijo
AU - Escobar, John Willmer
N1 - Publisher Copyright:
© 2015 Growing Science Ltd. All rights reserved.
PY - 2015
Y1 - 2015
N2 - This paper presents the problem of redesigning a supply network of large scale by considering variability of the demand. The central problematic takes root in determining strategic decisions of closing and adjusting of capacity of some network echelons and the tactical decisions concerning to the distribution channels used for transporting products. We have formulated a deterministic Mixed Integer Linear Programming Model (MILP) and a stochastic MILP model (SMILP) whose objective functions are the maximization of the EBITDA (Earnings before Interest, Taxes, Depreciation and Amortization). The decisions of Network Design on stochastic model as capacities, number of warehouses in operation, material and product flows between echelons, are determined in a single stage by defining an objective function that penalizes unsatisfied demand and surplus of demand due to demand changes. The solution strategy adopted for the stochastic model is a scheme denominated as Sample Average Approximation (SAA). The model is based on the case of a Colombian company dedicated to production and marketing of foodstuffs and supplies for the bakery industry. The results show that the proposed methodology was a solid reference for decision support regarding to the supply networks redesign by considering the expected economic contribution of products and variability of the demand.
AB - This paper presents the problem of redesigning a supply network of large scale by considering variability of the demand. The central problematic takes root in determining strategic decisions of closing and adjusting of capacity of some network echelons and the tactical decisions concerning to the distribution channels used for transporting products. We have formulated a deterministic Mixed Integer Linear Programming Model (MILP) and a stochastic MILP model (SMILP) whose objective functions are the maximization of the EBITDA (Earnings before Interest, Taxes, Depreciation and Amortization). The decisions of Network Design on stochastic model as capacities, number of warehouses in operation, material and product flows between echelons, are determined in a single stage by defining an objective function that penalizes unsatisfied demand and surplus of demand due to demand changes. The solution strategy adopted for the stochastic model is a scheme denominated as Sample Average Approximation (SAA). The model is based on the case of a Colombian company dedicated to production and marketing of foodstuffs and supplies for the bakery industry. The results show that the proposed methodology was a solid reference for decision support regarding to the supply networks redesign by considering the expected economic contribution of products and variability of the demand.
KW - Logistics
KW - Sample Average Approximation Stochastic Linear Programming
KW - Supply Network Design
KW - Variability of the Demand
UR - http://www.scopus.com/inward/record.url?scp=84932612100&partnerID=8YFLogxK
U2 - 10.5267/j.ijiec.2015.5.001
DO - 10.5267/j.ijiec.2015.5.001
M3 - Article
AN - SCOPUS:84932612100
SN - 1923-2926
VL - 6
SP - 521
EP - 538
JO - International Journal of Industrial Engineering Computations
JF - International Journal of Industrial Engineering Computations
IS - 4
ER -