Supply chain's volume flexibility decision model and its optimization under demand uncertainty

Flexibility is defined as the ability to respond to an uncertain environment. In an uncertain environment, system flexibility is critical for a supply chain (SC) to respond rapidly to the changes of external surrounding. The optimal decision on SC's volume flexibility is studied under demand uncertainty in this paper. Subject to volume flexibility, a SC-cost-minimizing model is established. Through optimal analysis, the efficient frontiers of SC flexibility investment and a calculation method for determining the optimal decision are given. Finally, an example is given to illustrate the model.