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

In this paper, a 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. A Stackelberg game is used to formulate the competition among the components of supply chain. A bi level mixed integer programming mathematical model is used to formulate the supply chain and the impacts of the strategic facility location on the operational decisions such as inventory and shipments have been investigated via the mathematical model. To solve the model, Bender’s decomposition algorithm is used. Some discussions through several numerical examples and some managerial insight are suggested for the situations similar to the assumed problem.