Hybrid simulation based optimization approach for supply chain management

In this work, we propose a hybrid simulation optimization approach that addresses the problem of supply chain management. We formulated the problem as a mathematical model which minimizes the summation of production cost, transportation cost, inventory holding and shortage costs, subject to capacity...

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Bibliographic Details
Published inComputers & chemical engineering Vol. 47; pp. 183 - 193
Main Authors Nikolopoulou, Amalia, Ierapetritou, Marianthi G.
Format Journal Article
LanguageEnglish
Published Elsevier Ltd 20.12.2012
Subjects
Hybrid approach
Optimization
SCM
Simulation
Hybrid approach
Simulation
SCM
Optimization
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ISSN0098-1354
1873-4375
DOI10.1016/j.compchemeng.2012.06.045

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Summary:In this work, we propose a hybrid simulation optimization approach that addresses the problem of supply chain management. We formulated the problem as a mathematical model which minimizes the summation of production cost, transportation cost, inventory holding and shortage costs, subject to capacity and inventory balance constraints and propose a hybrid approach combining mathematical programming and simulation model to solve this problem. The main objective of this approach is to overcome the computational complexity associated with solving the underlying large-scale mixed integer linear problem and to provide a better representation of supply chain reality. The simulation-based optimization strategy uses an agent-based system to model the supply chain network. Each entity in the supply chain is represented as an agent whose activity is described by a collection of behavioral rules. The overall system is coupled with an optimization algorithm that is designed to address planning and scheduling level decisions.
ISSN:0098-1354
1873-4375
DOI:10.1016/j.compchemeng.2012.06.045