Multi-Period Mixed Integer Programming Model for Supply Chain Planning Under Safety Stock

Abstract

Supply chain management philosophy has been adopted by enterprises due to the requirement of customer demand satisfaction in reasonable times under market competition. In case of rapid increase in product demands and/or occurrence of supply problems in materials, enterprises choose holding some amount of safety stock of several materials and products. In this study, a multi-period, multi-product supply chain with different suppliers, material storages, production plants, distribution centers and customers is modeled. To determine the optimal production, supply and storage plans at minimum cost, a mixed-integer programming model is proposed. Capacity, bill-of-materials structure of products and placement of safety stocks are taken into account within the proposed model. Solutions of a set of examples are also presented in order to test the model.

Keywords

• Supply chain
• Safety stock
• Integer programming
• Bill-of-materials

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