Underestimating supplier capacity, and their ability to deal with rapid ramp-ups in production, can have a similar knock-on effect on working conditions.
The simulation tests the robustness of the MIP solution for supplier capacity risk and demand risk.
Incorporating uncertainty of demand and supplier capacity into the optimization model results in a robust selection of suppliers.
The company noted in its blog post that announced the deal that "there is excess supplier capacity today" in the solar panel industry.
Inequality (8) ensures that the total raw materials transported from each available supplier to the manufacturers cannot exceed the supplier capacity.
In order to take into account the level of demands and maximum production capacities with single/multiple sourcing, in this new formulation we introduce supplier capacity constraints.
Furthermore, a sensitivity analysis is performed on such factors as demand, return of equity rate, tax rate, production capacity and supplier capacity while the impacts of their changes on multi-objective function and satisfaction coefficient are simultaneously calculated.
As another study, Nager et al. (2014) developed a multi-objective two-stage stochastic programming supply chain model that incorporated imprecise production rate and supplier capacity under scenario dependent fuzzy random demand associated with new product supply chains.
To address real-world planning problems involving noisy, incomplete or erroneous data, the supplier capacity parameters of the supply chain and demand fluctuations are subject to uncertainty, which is modeled by fuzzy stochastic programming.
Moreover, with the application of appropriate reaching law, the controller is demonstrated to conform to the supplier capacity limitations, and it outperforms the classical order-up-to policy in terms of higher service level, smaller holding costs, and smaller order-to-demand variance ratio.
