Optimization of a Dynamic Supply Chain Model with Budget Constraint

This paper presents a new dynamic model in strategic and tactical planning in a multiple echelon multiple commodity production-distribution network and a solution procedure based on Lagrangian Relaxation (LR) approach. The proposed model considers different time resolutions for tactical and strategic decisions. Also expansion of supply chain in the proposed model is restricted to cumulative net profit and investments. Commercial general purpose optimization software can solve small instances of problem; however, computational times with such software become prohibitive for reasonably sized instances. For this reason, we will adopt method to solve problem based on the Lagrangian relaxation technique. In the proposed solution algorithm, feasibility of the solutions is ensured with some modifications in subproblems. Results of the computational analysis confirm efficiency of the proposed approach.