Stochastic programming model and algorithm of multilocation lateral transshipment problem in supply chain system

CHEN Jing-xian, WANG Guo-hua, LIANG Liang

Systems Engineering - Theory & Practice ›› 2012, Vol. 32 ›› Issue (4) : 738-745.

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Systems Engineering - Theory & Practice ›› 2012, Vol. 32 ›› Issue (4) : 738-745. DOI: 10.12011/1000-6788(2012)4-738

Stochastic programming model and algorithm of multilocation lateral transshipment problem in supply chain system

  • CHEN Jing-xian1, WANG Guo-hua1, LIANG Liang2
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Abstract

In order to derive optimal lateral transshipment policy among retailers in supply chain system under stochastic demand environment, this paper developed a stochastic programming method to model the multilocation lateral transshipment problem in supply chain system. We considered a supply chain system that includes a supplier and multi retailers; they all adopt order-up-to approach to control inventories. Retailers faced stochastic demand and shared their inventories among each other--a retailer would transship residual stocks to other retailers which faced residual demand after demand realized. Based on the traditional hypothetical conditions, we developed a mix 0-1 programming model under system total cost minimization objective. Because of the stochastic vectors in the model, we covert the model to a stochastic expected value programming model, designed a heuristic algorithm that combined stochastic quasi gradient algorithm (SQGA) with genetic algorithm (GA), and explained the solution procedure. Numerical examples showed the efficiency of the model and algorithm. Besides, we investigated the case of coefficient demand and the case of violation of traditional transshipment conditions. Numerical results show that this model and algorithm is considerably effective in determining the optimal order-up-to points in supply chain system with retailers' lateral transshipment existence.

Key words

supply chain / lateral transshipment / stochastic programming / stochastic quasi gradient algorithm / genetic algorithm

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CHEN Jing-xian , WANG Guo-hua , LIANG Liang. Stochastic programming model and algorithm of multilocation lateral transshipment problem in supply chain system. Systems Engineering - Theory & Practice, 2012, 32(4): 738-745 https://doi.org/10.12011/1000-6788(2012)4-738

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