Quantitative Modelling of Supply Chains

Abstract

It is impossible to describe the unlimited variety of real world with limited mathematical means. Boris Sokolov 8.1 Operations Research OR on the SCM can be divided into three primary approaches to conducting SC modelling. These are optimization, simulation, and heuristics. 8.1.1 Optimization Optimization is an analysis method that determines the best possible method of designing a particular SC. Optimization methods for SCM have been a very visible and influential topic in the field of OR. Tayur et al. (1999), de Kok and Graves (2004) and Simchi-Levi et al. (2004) provide a systematic summary of OR on quantitative models of the SCM, especially for inventory management, tactical planning decisions, and supply contracts. The formulation of strategic production-distribution models for SCM has been widely investigated. Most of these formulations are introduced in the form of MILP models. Beginning with the seminal work of Geoffrion and Graves (1974) on multi-commodity distribution system design, a large number of optimization-based approaches have been proposed for the design of supply networks (Vidal and Goetschalckx 1997). Arntzen et al. (1995) develop a MIP model, called GSCM (Global SC Model), that can accommodate multiple products, facilities, stages (echelons), time periods and transportation modes. provided a systematic summary of operations research on quantitative models for SCD. A good overview of mathematical programming approaches is presented in Chandra and Grabis (2007).