Abstract
This study suggests a supply chain design deploying a novel idea from production planning. The idea of capacity bottlenecks is used to improve flexibility in a multi-echelon multi-product supply chain. We suggest an optimization model that focuses on optimal capacity allocations to bottleneck points in order to enhance overall flexibility. The proposed mixed-integer linear programming model minimizes the total cost of facility establishment as well as their utilization and transportation cost. The performance of suggested model is investigated by several test problems with uncertainty in demand, cost, capacity, and product specifications. The results indicate the superiority of the suggested model to the previous flexibility formulation method. According to the numerical results, the proposed model decreases the total supply chain cost by up to 16 % on average. Another advantageous feature of the proposed model is its capability of solving previously insolvable test problems by optimizing flexibility levels.
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