A Robust Decision-Making Under Disruption Risks

Abstract

In this chapter we look for an equitably efficient solution with respect to both average-case and worst-case performance measures of a supply chain.

Problems

8.1

Modify the SMIP models presented in this chapter for multiple part types with subsets of part types required for each customer order and subsets of suppliers available for each part type.

8.2

How would you determine an upper bound, $C_{max}$, on the cost per product for model SPS_E(c, $\alpha \mathbf ) ?$

8.3

Mixed mean-risk decision-making

(a) Modify models SPS_ECV(sl) and SPS_ECV(c) to optimize expected cost and CVaR of service level and optimize expected service level and CVaR of cost, respectively.

(b) How should the values of the optimized objective functions be scaled into the interval [0,1] to avoid dimensional inconsistency among the two objectives and how should the trade-off parameter be selected?

(c) How would you interpret the mixed mean-risk solutions?

8.4

Explain why the robust supply portfolios for the cost-based objective is strongly dependent on the cost parameters and which parameters are the most influential?

8.5

Explain why the expected worst-case production for the robust solution in Fig. 8.5(a) is nearly negligible?