An integrated supply chain model for new products with imprecise production and supply under scenario dependent fuzzy random demand

Abstract

In the present day business scenario, instant changes in market demand, different source of materials and manufacturing technologies force many companies to change their supply chain planning in order to tackle the real-world uncertainty. The purpose of this paper is to develop a multi-objective two-stage stochastic programming supply chain model that incorporates imprecise production rate and supplier capacity under scenario dependent fuzzy random demand associated with new product supply chains. The objectives are to maximise the supply chain profit, achieve desired service level and minimise financial risk. The proposed model allows simultaneous determination of optimum supply chain design, procurement and production quantities across the different plants, and trade-offs between inventory and transportation modes for both inbound and outbound logistics. Analogous to chance constraints, we have used the possibility measure to quantify the demand uncertainties and the model is solved using fuzzy linear programming approach. An illustration is presented to demonstrate the effectiveness of the proposed model. Sensitivity analysis is performed for maximisation of the supply chain profit with respect to different confidence level of service, risk and possibility measure. It is found that when one considers the service level and risk as robustness measure the variability in profit reduces.

Keywords:

• supply chain management
• new products
• two-stage stochastic programming
• fuzzy random demand
• possibility measure

Acknowledgements

The authors are grateful to the Associate Editor and the anonymous referees for their valuable comments and suggestions.

Additional information

Notes on contributors

Lokesh Nagar

Lokesh Nagar is working as Software Manager at SAS R & D India Pvt Ltd. He received his PhD degree from IIT Bombay in 2009. Before joining SAS, he has worked as a Research Scholar at IIT Bombay. His main areas of research interest include supply chain modelling, multi-objective decision-making, data mining, forecasting and stochastic optimisation. Dr Nagar has many publications in various international journals, patent, book chapters and conferences.

Pankaj Dutta

Pankaj Dutta is an Assistant Professor of Shailesh J. Mehta School of Management at IIT Bombay. He received his PhD degree from IIT Kharagpur in 2007. Before joining SJMSOM, he has served as a Lecturer at BITS, Pilani. He has also worked as Visiting Research Fellow at EPFL, Swiss Federal Institute of Technology, Lausanne. His main areas of research interest include supply chain modelling, inventory management, reverse logistics, fuzzy optimisation and multi-objective decision-making. In 2005, while working on his PhD dissertation, he pioneered the concept of fuzzy random demand in the field of inventory systems. Dr Dutta has many publications in various international journals, book chapters and conferences. He is also a reviewer of many reputed international journals.

Karuna Jain

Karuna Jain (PhD, IIT Kharagpur; Post Doctoral Fellow, Faculty of Management, University of Calgary, Canada) is the MHRD IPR Chair Professor, at the Shailesh J. Mehta School of Management, Indian Institute of Technology Bombay, India. Prof. Jain has extensive industrial and teaching experience in the field of Operations and Technology Management. Her active research interests span across Strategic Management of Technology and Innovation, Intellectual Property Strategy and Management, Project Management and Supply Chain Management. She has been actively publishing her research in national and international journals and conferences across the areas of Technology and Operations management (IAMOT, POMS, PICMET, WCIC and IFTM). Her joint research published in the Journal of Intellectual Capital won the - ‘Emerald Literati Network 2007 Awards for Excellence’ and has received best research paper awards in international conferences. Prof. Jain is the recipient of the “Best Teacher in Operations Management” in the 16th Business School Affaire & Dewang Mehta Business School Awards, 2009 and “Best Professor in Operations Management in Asia” by CMO Asia, 2010. Prof. Jain serves on numerous academic, professional and government bodies in various capacities like Member, Sectoral Innovation Council on Intellectual Property Rights under the Department of Industrial Policy and Promotion, Ministry of Commerce and Industry, Government of India, 2011–2012, Member, Decision Sciences Institute Board, 2011–2012, Regional Vice President for the Decision Sciences Institute Indian Subcontinent Region, 2011–2012, Vice Chairperson for Project Management Institute - India Academic Advisory, from December 2011–12.