Integrated stochastic supply-chain design models

Abstract

The issues related to uncertainties within a supply chain and their impacts on optimal supply-chain decisions are discussed. Designing an efficient supply chain can provide a company with a significant competitive advantage in the marketplace. A three-tiered supply-chain system consisting of one or more suppliers, distribution centers (DCs), and retailers is used to determine how many DCs are necessary, where to locate them, which retailers to assign to each DC, how often to reorder at the DC, and what level of safety stock to maintain to minimize total location, shipment, and inventory costs while ensuring a specified level of service. Decision makers must consider important factors while designing a supply chain such as exchange rates, production scheduling requirements, sale prices, sourcing flexibility, and import tariffs.