Reliable Supply Chain Network Design. (2nd October 2015)

• Record Type: Journal Article
• Authors: Yildiz, Hakan; Yoon, Jiho; Talluri, Srinivas; Ho, William
• Is Part Of: Decision sciences. Volume 47:Number 4(2016:Aug.)
• Page Start: 661
• Page End: 698
• Publication Date: 2015-10-02
• Subjects: Heuristics -- Multiobjective Optimization -- Network Design -- Reliability -- Supply Chain Risk; Decision making -- Periodicals; Policy sciences -- Periodicals; 658.40305
• DOI: 10.1111/deci.12160
• Languages: English
• ISSNs: 0011-7315

Abstract

ABSTRACT: Risk management in supply chains has been receiving increased attention in the past few years. In this article, we present formulations for the strategic supply chain network design problem with dual objectives, which usually conflict with each other: minimizing cost and maximizing reliability. Quantifying the total reliability of a network design is not as straightforward as total cost calculation. We use reliability indices and develop analytical formulations that model the impact of upstream supply chain on individual entities' reliability to quantify the total reliability of a network. The resulting multiobjective nonlinear model is solved using a novel hybrid algorithm that utilizes a genetic algorithm for network design and linear programming for network flow optimization. We demonstrate the application of our approach through illustrative examples in establishing tradeoffs between cost and reliability in network design and present managerial implications.