Article ID: | iaor20081278 |
Country: | United States |
Volume: | 55 |
Issue: | 2 |
Start Page Number: | 378 |
End Page Number: | 394 |
Publication Date: | Mar 2007 |
Journal: | Operations Research |
Authors: | Lejeune Miguel A., Ruszcyski Andrzej |
Keywords: | production, programming: integer, programming: transportation |
We consider a supply chain operating in an uncertain environment: The customers' demand is characterized by a discrete probability distribution. A probabilistic programming approach is adopted for constructing an inventory–production–distribution plan over a multiperiod planning horizon. The plan does not allow the backlogging of the unsatisfied demand, and minimizes the costs of the supply chain while enabling it to reach a prescribed nonstockout service level. It is a strategic plan that hedges against undesirable outcomes, and that can be adjusted to account for possible favorable realizations of uncertain quantities. A modular, integrated, and computationally tractable method is proposed for the solution of the associated stochastic mixed-integer optimization problems containing joint probabilistic constraints with dependent right-hand side variables. The concept of