Benders Decomposition Algorithm for Competitive Supply Chain Network Design under Risk of Disruption and Uncertainty

In this paper, bi-level programming is proposed for designing a competitive supply chain network. A two-stage stochastic programming approach has been developed for a multi-product supply chain comprising a capacitated supplier, several distribution centers, retailers and some resellers in the market. The proposed model considers demand’s uncertainty and disruption in distribution centers and transportation links. Then, Stackelberg game is used to formulate the competition among the component of supply chain. A bi-level mixed integer programming is used for developing a supply chain performed currently, then the impacts of the strategic facility location on the operational decisions such as inventory and shipments, have been investigated. To solve the model, we have used Bender’s decomposition algorithm, which is an exact algorithm for solving mixed integer programming. Finally, the outputs of the model are illustrated for investigating the efficiency of proposed model. Then, some discussions have been done through several numerical examples and some managerial insight has been suggested for the situations similar to the assumed problem.