A Robust Optimization Approach to Supply Chain Cost Optimization

Problems under uncertainties require an efficient operation of supply chain planning. In this paper, we discuss and illustrate a four-layer supply chain network including suppliers, manufacturers, warehouses, and markets, which is designed to address the production and transportation of a single product. We use a robust optimization approach for the analysis of uncertainties associated with the primary input parameters including demand, supply, and cost parameters. Additionally, we provide a numerical example of a supply chain network and show how sensitive is the objective function to the conservatism degrees at different levels of changes in the decision parameters. It is found that the objective function is most sensitive to the forecast of uncertain demands