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A combined approach for modeling multi-echelon multi-period decentralized supply chain
Marjia Haque1, Sanjoy Kumar Paul2, Ruhul Sarker1
1School of Engineering and Information Technology, University of New South Wales, Canberra, Australia.
Annals of Operations Research
|June 9, 2021
Summary
This study introduces a two-phase planning approach for decentralized supply chains (SC), enhancing individual entity profits. The model proves more effective and realistic than traditional single-phase methods for SC network optimization.
Area of Science:
- Operations Research
- Supply Chain Management
- Industrial Engineering
Background:
- Decentralized supply chains (SC) involve multiple independent entities.
- Traditional SC models often assume centralized control, which may not reflect reality.
- Optimizing profit for individual stages in a decentralized SC is complex.
Purpose of the Study:
- To propose a novel two-phase planning approach for a multi-echelon, multi-period decentralized supply chain.
- To enable independent decision-making for each entity (manufacturer, distributor, retailer) while coordinating overall SC objectives.
- To maximize individual stage profits within a decentralized SC network.
Main Methods:
- Development of a mathematical model for centralized SC coordination (Phase 1).
- Formulation of separate mathematical models for independent entities with individual objectives (Phase 2).
- Application of a goal programming technique to set near-optimal profit targets for each entity.
- Numerical analysis to validate the proposed approach.
Main Results:
- The two-phase planning approach effectively balances centralized coordination with decentralized decision-making.
- Individual entities can achieve near-optimal profits through the goal programming technique.
- The proposed model demonstrates superior realism and effectiveness compared to single-phase centralized SC models.
Conclusions:
- The combined two-phase planning method is a more practical and efficient strategy for decentralized supply chain management.
- This approach enhances the performance of individual stages and the overall supply chain network.
- The study highlights the benefits of integrating coordinated centralized control with independent decentralized decision-making.
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