Multi-period supply chain re-design in the electric motors industry Model implementation and solution strategy

RODRIGUEZ, MARIA ANALIA; HARJUNKOSKI, IIRO; GROSSMANN, IGNACIO E.

Pittsburgh

Encuentro; Enterprise-wide Optimization Annual Meeting; 2012

Carnegie Mellon Universitity - Center of Advanced Process Decision Making

The main objective of this project is to redesign an optimal supply chain for the electric motors industry minimizing investments and operational costs and deciding where and when to place warehouses, which installed warehouses should be eliminated in each period, what are the stock capacities profiles and safety stocks required as well as how to connect the different echelons of the supply chain in order to satisfy uncertain demand of motors over a multi-period horizon planning. Some important challenges must be addressed:  Multiple products to deliver  Uncertain Demand with known probability distribution due to motor failure rate in End Customer Plants  Demand can be partially satisfied with repaired motors  End customers could have storage capacities  End customers expect different service level for their product (guaranteed time)  Multi-period scope  How to efficiently implement the original non-linear model Since the original model is MINLP, an iterative approach is proposed to obtain global solution. As a result, the model size is increased in each iteration because new binary and continuous variables as well as constraints are introduced in each linearization step. Then, a Lagrangean Decomposition Technique will be applied to solve the problem in reasonable execution time for large problems.