A Fuzzy Goal Programming Approach for Collaborative Supply Chain Master Planning

Abstract

Supply chain management (SCM) can be defined as the systemic, strategic coordination of the traditional business functions and the tactics across these business functions within a particular company and across businesses within the supply chain (SC), for the purposes of improving the long term performance of the individual companies and the SC as a whole (Mentzer et al. 2001). One important way to achieve coordination in an inter-organizational SC is the alignment of the future activities of SC members, hence the coordination of plans. It is often proposed that operations planning in supply chains can be organized in terms of a hierarchical planning system (Dudek & Stadtler 2005). This approach assumes a single decision maker with total visibility of system details who makes centralized decisions for the entire SC. However, if partners are reluctant to reveal all of their information or it is too costly to keep the information of the entire supply chain up-to-date, the hierarchical planning approach is unsuitable or infeasible (Stadtler 2005). Hence, the question arises of how to link, coordinate and optimize production planning of independent partners in the SC without intruding their decision authorities and private information (Nie et al. 2006). Stadtler (2009) defines collaborative planning (CP) as a joint decision making process for aligning plans of individual SC members with the aim of achieving coordination in light of information asymmetry. Then, to generate a good production-distribution plan in a SC, it is necessary to resolve conflicts between several decentralised functional units, because each unit tries to locally optimise its own objectives, rather than the overall SC objectives. Because of this, in the last few years, the visions that cover a CP process such as a distributed decision-making process are getting more important (Hernandez et al. 2009). Selim et al. (2008) assert that fuzzy goal programming (FGP) approaches can effectively be used in handling the collaborative production and distribution planning problems in both centralized and decentralized SC structures. The reasons of using FGP approaches in this type of problems are explained by Selim et al. (2008) as follows: 1. Collaborative planning is the more preferred mode of operation by today’s companies operated in SCs. These companies may consent to sacrifice the aspiration levels for their goals to some extent in the short run to provide the loyalty of their partners or to strengthen their partners’ competitive position in the long term. In this way, they can facilitate providing a long-term collaboration with their partners and subsequently gaining a sustainable competitive advantage.