A hierarchical approach for robust planning in supply chains

Supply chains are subject to various types of uncertainty. According to Geary et al. (2002), these types of uncertainty can be classified in four categories: demand, process, supply, and control uncertainty. In this presentation, we propose and discuss an integrated hierarchical planning approach for supply chains that generates plans which are robust to two particular types of uncertainty, namely demand and process uncertainty. These two types of uncertainty are typical in any supply chain and often lead to deteriorations in service levels. We aim at modeling the problem, in a supply chain, of meeting the uncertain demand when failure-prone machinery is used. The conditions affecting a supply chain are naturally complex and make the analysis of the supply chain more difficult. Using a hierarchical approach makes it possible to reduce the size and possibly the complexity of a problem by decomposing it into simpler and manageable sub-problems at the strategic, tactical and operational levels. Although there exists a vast literature addressing uncertainty in supply chains, most of the papers discusses the issue only at one specific level. We propose an integrated model, which addresses the uncertainty within a hierarchical process at all planning levels in a supply chain.