Supply Chain Network Design Problem for a New Market Opportunity in an Agile Manufacturing System

The characteristics of today's competitive environment, such as the speed with which products are designed, manufactured, and distributed, and the need for higher responsiveness and lower operational cost, are forcing companies to search for innovative ways to do business. The concept of agile manufacturing has been proposed in response to these challenges for companies. This paper copes with the strategic and tactical level decisions in agile supply chain network design. An efficient mixed integer linear programming (MILP) model is developed that is able to consider the key characteristics of agile supply chain such as direct shipments, outsourcing, different transportation modes, discount, alliance (process and information integration) between opened facilities and maximum waiting time of customers for deliveries. In addition, in the proposed model the capacity of facilities is determined as decision variables which are often assumed to be fixed. Computational results illustrate that the proposed model can be applied as a power tool in agile supply chain network design as well as integration of strategic decisions with tactical decisions.