Designing Profitable and Responsive Supply Chains under Uncertainty

Abstract

In this paper, we develop a multi-objective two-stage stochastic programming model, which takes into account the selection of warehouse and retailer sites and the decision about production levels, inventory levels, and shipping quantities among the entities of the supply chain network. The first objective function is to maximize the chain’s total profit over multiple periods, and the second objective function is to minimize the total travel times for unsatisfied customers, whose demands must be met by retailers which are established in other markets, to maximize the chain’s responsiveness. Demands, selling prices and productions times at manufacturing sites are all considered as uncertain parameters. The two objective functions are in conflict with each other, and we use ε-constraint method to generate a set of Pareto optimal solutions for the proposed multi-objective two-stage stochastic programming problem.