Optimal design of supply chain network under uncertainty environment using hybrid analytical and simulation modeling approach

Abstract

Abstract Models that aim to optimize the design of supply chain networks have gained more interest in the supply chain literature. Mixed-integer linear programming and discrete-event simulation are widely used for such an optimization problem. We present a hybrid approach to support decisions for supply chain network design using a combination of analytical and discrete-event simulation models. The proposed approach is based on iterative procedures until the difference between subsequent solutions satisfies the pre-determined termination criteria. The effectiveness of proposed approach is illustrated by an example, which shows closer to optimal results with much faster solving time than the results obtained from the conventional simulation-based optimization model. The efficacy of this proposed hybrid approach is promising and can be applied as a powerful tool in designing a real supply chain network. It also provides the possibility to model and solve more realistic problems, which incorporate dynamism and uncertainty.

Keywords

• Hybrid optimization
• Supply chain network design
• MILP
• Simulation-based optimization
• Uncertainty