Entropy Based Optimization of Decentralized Supply Chain Networks

Supply chain is an organized combination of inbound logistics, production plants and multiechelon distribution network. Decentralized distribution networks are common and prone to exogenous and endogenous uncertainties. Information uncertainty from the downstream customer and material uncertainty from the upstream supplier makes the supply chain behavior more complex. Previous attempts made to enhance the supply chain performance by optimizing the replenishment strategy do not pay attention to the issue of increasing uncertainty (and consequently operational complexity) in the system. Complexity generates unpredictability in supply chain behavior, affects customer satisfaction, and increases cost. This work aims to improve supply chain performance by quantifying and minimizing the complexity associated with the distribution system through entropy calculations in accordance with the business goal and demand pattern faced by the network.