Risk-Averse Co-Decision for Lower-Carbon Product Family Configuration and Resilient Supplier Selection

Abstract

Due to global pandemics, political unrest and natural disasters, the stability of the supply chain is facing the challenge of more uncertain events. Although many scholars have conducted research on improving the resilience of the supply chain, the research on integrating product family configuration and supplier selection (PCSS) under disruption risks is limited. In this paper, the centralized supply chain network, which contains only one major manufacturer and several suppliers, is considered, and one resilience strategy (i.e., the fortified supplier) is used to enhance the resilience level of the selected supply base. Then, an improved stochastic bi-objective mixed integer programming model is proposed to support co-decision for PCSS under disruption risks. Furthermore, considering the above risk-neutral model as a benchmark, a risk-averse mixed integer program with Conditional Value-at-Risk (CVaR) is formulated to achieve maximum potential worst-case profit and minimum expected total greenhouse gases (GHG) emissions. Then, NSGA-II is applied to solve the proposed stochastic bi-objective mixed integer programming model. Taking the electronic dictionary as a case study, the risk-neutral solutions and risk-averse solutions that optimize, respectively, average and worst-case objectives of co-decision are also compared under two different ranges of disruption probability. The sensitivity analysis on the confidence level indicates that fortifying suppliers and controlling market share in co-decision for PCSS can effectively reduce the risk of low-profit/high-cost while minimizing the expected GHG emissions. Meanwhile, the effects of low-probability risk are more likely to be ignored in the risk-neutral solution, and it is necessary to adopt a risk-averse solution to reduce potential worst-case losses.