Mathematical modelling of a decentralized multi-echelon supply chain network considering service level under uncertainty

Abstract

In this study, a planning problem for multi-time, multi-product, multi-echelon Supply Chains (SCs) is studied and the implications of formulating a tri-level model to integrate Procurement, Production, and Distribution (PPD) while maintaining the existing hierarchy in the decision process are discussed. In our model, there were three different decision makers controlling the PPD processes in the absence of cooperation because of different optimization strategies. First, a hierarchical Tri-Level Programming (TLP) model was developed to deal with decentralized SC problems. Then, an algorithm was formulated to solve the proposed model. A numerical sample was investigated to scrutinize applicability of the optimization model and the proposed algorithm. In order to evaluate the application of the model and the proposed algorithm, 10 sets of small and large problems were randomly generated and tested. The experimental results showed that our proposed fuzzy-stochastic Simulation-based Hierarchical Interactive Particle Swarm Optimization (Sim-HIPSO) performed well in finding good approximate solutions within reasonable computational times.