Supply chain network downsizing with product line pruning using a new demand substitution

J. Ashayeri, N. Ma, R. Sotirov

Research output: Contribution to journalArticleScientificpeer-review

3 Citations (Scopus)

Abstract

This paper presents an optimization model for downsizing a multi-product supply chain facing bankruptcy risk, where multi-functional production facilities are shared for producing a group of substitutable products. In order to determine the potential demand after discontinuation of certain product types, the proposed mixed integer programming model incorporates a new general formulation of demand substitution, which allows arbitrary demand diversion and arbitrary replacement rates between products under investigation. The new substitution formulation enables considering uneven substitutions for supply chain network design and therefore it extends currently used substitution approaches. A series of systematically generated downsizing cases confirm the validity of the here proposed approach, and illustrate how downsized chains can successfully adopt to the new circumstances.
Original languageEnglish
Pages (from-to)1669-1685
JournalThe Journal of the Operational Research Society
Volume66
Issue number10
Early online date28 Jan 2015
DOIs
Publication statusPublished - Oct 2015

Keywords

  • supply chain management
  • production
  • mixed integer programming

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