A Robust Optimization Approach to Supply Chain Management

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A Robust Optimization Approach to Supply Chain Management
Abstract. We propose a general methodology based on robust optimization to address the problem of optimally controlling a supply chain subject to stochastic demand in discrete time. The attractive features of the proposed approach are: (a) It incorporates a wide variety of phenomena, including demands that are not identically distributed over time and capacity on the echelons and links; (b) it uses very little information on the demand distributions; (c) it leads to qualitatively similar optimal policies (basestock policies) as in dynamic programming; (d) it is numerically tractable for large scale supply chain problems even in networks, where dynamic programming methods face serious dimensionality problems; (e) in preliminary computational experiments, it often outperforms dynamic programming based solutions for a wide range of parameters.
Dimitris Bertsimas, Aurélie Thiele
Added 31 Oct 2010
Updated 31 Oct 2010
Type Conference
Year 2004
Where IPCO
Authors Dimitris Bertsimas, Aurélie Thiele
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