The optimal profit distribution problem in a multi-echelon supply chain network: A fuzzy optimization approach

Abstract

A multi-product, multi-stage, and multi-period production and distribution planning model is formulated for a typical multi-echelon supply chain network to achieve multiple objectives such as maximizing profit of each participant enterprise, maximizing customer service level, maximizing the safe inventory levels, and ensuring fair profit distribution for all partners. A two-phase fuzzy decision-making method is proposed to attain compromised solution between all conflict objectives. Therein, each objective function is viewed as a fuzzy goal and a membership function is used to characterize the transition from the objective value to the degree of satisfaction. The final decision is interpreted as the fuzzy aggregation of multiple objectives and is measured by the maximized overall degree of satisfaction. The proposed two-phase fuzzy optimization method combines advantages of two popular t-norms, the minimum and the product, for implementing the fuzzy aggregation. One numerical case study is supplied, demonstrating that the proposed two-phase fuzzy intersection method can provide a better compensatory solution for multi-objective optimization problems in a supply chain network.