Bender s Deco mposition for Supply Chain N etwork Redesi gn with Capacity Plann ing and Multi- eriod Pricing

Demand fluctuations, network cost incre ase, and n ew services proposition for cust omers ma ke compani es more in teresting in network redesigning problems. These problems allow the existing network to increase or decrease its cap city in order to mee t changing customers’ demands. I n this study , a linear m ixed integer programm ing model is proposed to redesign a supply c hain netwo rk which has price-sensitive custom rs. In addition, due to the nature o f the proble m, both strategic and tactical d ecisions are taken into account simultaneously. Strategic decisions consist of opening ne w facilities, losing exist ing ones, a nd adding discrete capa city levels to all network facilities. Tactical fa cilities are pricing and determining flow between differe t network echelons. ricing is a n importan t fragment of supply c hain due to two reasons: first, it represents potential r evenue of each product; second, b ased on su p ply-demand relations, it enables supply chain to provi de demand s by making suitable c hanges in number o f facilities and their capacitie s. Therefore, this model aims to co sider both pricing and redesigning decisions simultaneo sly in ord er to maxi ize the network profit.Based on the solutio time of d signing/red esigning pr oblems with CPLEX solver in GA MS, these p roblems are among the complex and challenging ones. To overcome his proble in this st dy, Benders decompos tion appro ach was us ed to solve a multi-pr oduct, mult - echelon a d multi-per iod supply chain netw rk redesig n ing proble m with price-sensitive customers. Results prove the appropriate performance of the proposed algo rithm for th e model.

Keywords:

Supply chain Net work Redesign , Capacity Planning , Multi-Peri od Pricing , Benders Decomposition method