A combined approach for modeling multi-echelon multi-period decentralized supply chain

In this paper, a multi-echelon, multi-period, decentralized supply chain (SC) with a single manufacturer, single distributor and single retailer is considered. For this setting, a two-phase planning approach combining centralized and decentralized decision-making processes is proposed, in which the first-phase planning is a coordinated centralized controlled, and the second-phase planning is viewed as independent decentralized decision-making for individual entities. This research focuses on the independence and equally powerful behavior of the individual entities with the aim of achieving the maximum profit for each stage. A mathematical model for total SC coordination as a first-phase planning problem and separate ones for each of the independent members with their individual objectives and constraints as second-phase planning problems are developed. We introduce a new solution approach using a goal programming technique in which a target or goal value is set for each independent decision problem to ensure that it obtains a near value for its individual optimum profit, with a numerical analysis presented to explain the results. Moreover, the proposed two-phase model is compared with a single-phase approach in which all stages are considered dependent on each other as parts of a centralized SC. The results prove that the combined two-phase planning method for a decentralized SC network is more realistic and effective than a traditional single-phase one.

Automated summary

The paper proposes a two-phase planning approach for a multi-echelon, multi-period, decentralized supply chain, focusing on the independence and equally powerful behavior of individual entities to achieve maximum profit. A mathematical model for total SC coordination as a first-phase planning problem and separate ones for each entity as second-phase planning problems are developed. The results show that the two-phase planning method is more realistic and effective than a traditional single-phase approach for a decentralized SC network.