Mathematical Model of Supply Chain Order Management Relying on Robust Optimization and Activity-Based Costing

Abstract

One of the most important functions of manufacturers and producers related to supply chain issues and decisions is management of supply chain orders. But in this way, there are several questions such as (a) what is the best order portfolio between received orders? (b) what are various decision scenarios under uncertainty? Indeed, these are the questions we want to answer in this paper. The purpose of this research is designing the mathematical model of supply chain orders management belongs to an Automakers Company. For this reason, we use both robust optimization and activity based costing method to gain more accurate and better solutions. Due to cost structure used in this model and complexity of cost objects as well as uncertainty of some parameters, we change this model to a robust model to obtain more reliable results. Finally, to assess the validity of the model and quality of solutions, we use simulation techniques. Findings show the model is valid and applicable to determine orders portfolio and various decision scenarios.

Keywords

• order portfolio
• robust mathematical model
• Uncertainty
• activity-based costing
• simulation