Abstract
This paper presents a bi-objective robust optimization model for the integrated production and distribution planning of a supply chain with the postponement strategy. The two objectives are economic (cost minimization) and environmental (greenhouse gas emissions minimization), respectively. The robust model is capable of incorporating decision makers' risk attitudes in addressing demand uncertainties under conditions of very limited historical data. The application of the proposed approach is examined using real data of an actual pharmaceutical supply chain as well as a benchmark problem in the existing literature. Our analysis and investigation focuses on exploring the extent to which the tradeoffs between economic and environmental objectives are influenced by the decision makers’ risk preferences and postponement strategy. We find that independent of the amount of greenhouse gas emissions and degree of demand variability, the postponement strategy can consistently provide cost savings for the supply chain.
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