A robust optimization model for agile and build-to-order supply chain planning under uncertainties

Supply chain planning as one of the most important processes within the supply chain management concept, has a great impact on firms’ success or failure. This paper considers a supply chain planning problem of an agile manufacturing company operating in a build‐to‐order environment under various kinds of uncertainty. An integrated optimization approach of procurement, production and distribution costs associated with the supply chain members has been taken into account. A robust optimization scenario‐based approach is used to absorb the influence of uncertain parameters and variables. The formulation is a robust optimization model with the objective of minimizing the expected total supply chain cost while maintaining customer service level. The developed multi‐product, multi‐period, multi‐echelon robust mixed‐integer linear programming model is then solved using the CPLEX optimization studio and guidance related to future areas of research is given.