Article ID: | iaor20163514 |
Volume: | 244 |
Issue: | 2 |
Start Page Number: | 429 |
End Page Number: | 454 |
Publication Date: | Sep 2016 |
Journal: | Annals of Operations Research |
Authors: | Kumar Arun, Govindan Kannan, Fahimnia Behnam, Esmaeilikia Masoud, Sarkis Joeseph, Mo John |
Keywords: | simulation, decision, demand, stochastic processes, combinatorial optimization, programming: nonlinear |
Supply chain flexibility is widely recognized as an approach to manage uncertainty. Uncertainty in the supply chain may arise from a number of sources such as demand and supply interruptions and lead time variability. A tactical supply chain planning model with multiple flexibility options incorporated in sourcing, manufacturing and logistics functions can be used for the analysis of flexibility adjustment in an existing supply chain. This paper develops such a tactical supply chain planning model incorporating a realistic range of flexibility options. A novel solution method is designed to solve the developed mixed integer nonlinear programming model. The utility of the proposed model and solution method is evaluated using data from an empirical case study. Analysis of the numerical results in different flexibility adjustment scenarios provides various managerial insights and practical implications.