Multi-Period Multi-Product Supply Chain Network Design in the Competitive Environment

Abstract

This paper studies a supply chain network design model with price competition. The supply chain provides multiple products for a market area in multiple periods. The model considers the location of manufacturers and retailers and assumes a probabilistic customer behavior based on an attraction function depending on both the location and the quality of the retailers. We aim to design the supply chain under the capacity constraint and maximize the supply chain profit in the competitive environment. The problem is formulated as a mixed integer nonlinear programming model. To solve the problem, we propose two heuristic algorithms - Simulated Annealing Search (SA) and Particle Swarm Optimization (PSO) - and numerically demonstrate the effectiveness of the proposed algorithms. Through the sensitivity analysis, we give some management insights.