A Multi-site Supply Chain Planning Using Multi-stage Stochastic Programming

Abstract

This study focuses on a multi-product, multi-period, multi-site supply chain planning problem under demand uncertainty. A multi-stage stochastic linear programming model is proposed to maximize the expected profit. The decisions to be made comprise the production amount, the inventory and backorder sizes as well as the quantity of products to be transported between upstream and downstream plants and customers in each period. A numerical example is presented in order to illustrate the effectiveness of the proposed model. Results indicate that the solution of the multi-stage stochastic model outperforms the deterministic and the two-stage stochastic models.