Robust supplier-selection and order-allocation in two-echelon supply networks: A parametric tolerance design approach
In this paper, we study the integrated supplier-selection and order-allocation problem in a two-echelon make-to-order supply chain motivated by the belt conveyor industry. In our setting, the Original Equipment Manufacturer (OEM) can source its single product from multiple suppliers in the first ech...
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| Vydané v: | Computers & industrial engineering Ročník 171; s. 108394 |
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| Hlavní autori: | , , |
| Médium: | Journal Article |
| Jazyk: | English |
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Elsevier Ltd
01.09.2022
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| ISSN: | 0360-8352, 1879-0550 |
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| Abstract | In this paper, we study the integrated supplier-selection and order-allocation problem in a two-echelon make-to-order supply chain motivated by the belt conveyor industry. In our setting, the Original Equipment Manufacturer (OEM) can source its single product from multiple suppliers in the first echelon who themselves source the sub-components of the product from multiple other suppliers in the second echelon. Within the second echelon, the suppliers fall into clusters of product supply networks based on their capability to produce a part. OEM in our setting is interested in determining the optimal tolerances for its supply network members to operate so as to minimize the variability introduced into the total supply chain costs. To obtain the optimal supplier-selection and order-allocations under a periodic review demand policy, we model the problem as a mixed-integer non-linear programming (MINLP) formulation. We further incorporate the Taguchi Method of Tolerance Design (TMTD) into our model, leading to robustness of our solutions while maintaining optimality in supplier-selection and order-allocation decisions. We test our model using a real-world case study and derive critical insights. Our numerical results demonstrate a 51% improvement in coefficient of variation of the objective function when our method is applied to the real life case study. Additionally, we show that as the level of confidence of the decision-maker on the range for a critical parameter increases, the gains from our methodology significantly increase.
•Joint supplier-selection and order allocation for a two-echelon supply network is studied.•Product supply network is considered under a periodic demand policy.•To attain optimal tolerances, a three-phase method based on Taguchi Method of Tolerance Design is proposed.•Reduction in the variability of overall cost is analyzed and critical insights are derived.•Supply chain robustness is verified through simulation. |
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| AbstractList | In this paper, we study the integrated supplier-selection and order-allocation problem in a two-echelon make-to-order supply chain motivated by the belt conveyor industry. In our setting, the Original Equipment Manufacturer (OEM) can source its single product from multiple suppliers in the first echelon who themselves source the sub-components of the product from multiple other suppliers in the second echelon. Within the second echelon, the suppliers fall into clusters of product supply networks based on their capability to produce a part. OEM in our setting is interested in determining the optimal tolerances for its supply network members to operate so as to minimize the variability introduced into the total supply chain costs. To obtain the optimal supplier-selection and order-allocations under a periodic review demand policy, we model the problem as a mixed-integer non-linear programming (MINLP) formulation. We further incorporate the Taguchi Method of Tolerance Design (TMTD) into our model, leading to robustness of our solutions while maintaining optimality in supplier-selection and order-allocation decisions. We test our model using a real-world case study and derive critical insights. Our numerical results demonstrate a 51% improvement in coefficient of variation of the objective function when our method is applied to the real life case study. Additionally, we show that as the level of confidence of the decision-maker on the range for a critical parameter increases, the gains from our methodology significantly increase.
•Joint supplier-selection and order allocation for a two-echelon supply network is studied.•Product supply network is considered under a periodic demand policy.•To attain optimal tolerances, a three-phase method based on Taguchi Method of Tolerance Design is proposed.•Reduction in the variability of overall cost is analyzed and critical insights are derived.•Supply chain robustness is verified through simulation. |
| ArticleNumber | 108394 |
| Author | Ahmad, Md. Tanweer Mondal, Sandeep Firouz, Mohammad |
| Author_xml | – sequence: 1 givenname: Md. Tanweer orcidid: 0000-0002-8565-2053 surname: Ahmad fullname: Ahmad, Md. Tanweer email: tanweer@ibsindia.org, tanweer.104@gmail.com organization: Department of Operations & IT, ICFAI Business School, The ICFAI Foundation for Higher Education, Hyderabad, 501203, India – sequence: 2 givenname: Mohammad surname: Firouz fullname: Firouz, Mohammad organization: Department of Management, Information Systems, and Quantitative Methods, Collat School of Business, University of Alabama at Birmingham, Birmingham, AL 35294, United States of America – sequence: 3 givenname: Sandeep surname: Mondal fullname: Mondal, Sandeep organization: Department of Management Studies, Indian Institute of Technology (Indian School of Mines), Dhanbad, 826004, India |
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| Keywords | Taguchi Method of Tolerance Design Supplier selection Order allocation Product supply network Mixed-integer non-linear programming |
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| SubjectTerms | Mixed-integer non-linear programming Order allocation Product supply network Supplier selection Taguchi Method of Tolerance Design |
| Title | Robust supplier-selection and order-allocation in two-echelon supply networks: A parametric tolerance design approach |
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