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A multi-objective stochastic programming approach for supply chain design considering risk

Author

Listed:
  • Azaron, A.
  • Brown, K.N.
  • Tarim, S.A.
  • Modarres, M.

Abstract

In this paper, we develop a multi-objective stochastic programming approach for supply chain design under uncertainty. Demands, supplies, processing, transportation, shortage and capacity expansion costs are all considered as the uncertain parameters. To develop a robust model, two additional objective functions are added into the traditional comprehensive supply chain design problem. So, our multi-objective model includes (i) the minimization of the sum of current investment costs and the expected future processing, transportation, shortage and capacity expansion costs, (ii) the minimization of the variance of the total cost and (iii) the minimization of the financial risk or the probability of not meeting a certain budget. The ideas of unreliable suppliers and capacity expansion, after the realization of uncertain parameters, are also incorporated into the model. Finally, we use the goal attainment technique to obtain the Pareto-optimal solutions that can be used for decision-making.

Suggested Citation

  • Azaron, A. & Brown, K.N. & Tarim, S.A. & Modarres, M., 2008. "A multi-objective stochastic programming approach for supply chain design considering risk," International Journal of Production Economics, Elsevier, vol. 116(1), pages 129-138, November.
    • Handle: RePEc:eee:proeco:v:116:y:2008:i:1:p:129-138
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    References listed on IDEAS

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