Reconfiguration of Supply Chain: A Two Stage Stochastic Programming

In this paper, we propose an extended relocation model for warehouses configuration in a supply chain network, in which uncertainty is associated to operational costs, production capacity and demands whereas, existing researches in this area are often restricted to deterministic environments. In real cases, we usually deal with stochastic parameters and this point justifies why the relocation model under uncertainty should be evaluated. Albeit the random parameterscan be replaced by their expectations for solving the problem, but sometimes, some methodologies such as two-stage stochastic programming works more capable. Thus, in this paper, for implementation of two stage stochastic approach, the sample average approximation (SAA) technique is integrated with the Bender's decomposition approach to improve the proposed model results. Moreover, this approach leads to approximate the fitted objective function of the problem comparison with the real stochastic problem especially for numerous scenarios. The proposed approach has been evaluated by some hypothetical numerical examples and the results show that the proposed approach can find better strategic solution in an uncertain environment comparing to the mean-value procedure (MVP) during the time horizon.

Keywords:

Supply chain network , Warehouse relocation , Two-stage stochastic programming , Decomposition methods , Sample average approximation