Computational comparison of two formulations for dynamic supply chain reconfiguration with capacity expansion and contraction

The strategic dynamic supply chain reconfiguration (DSCR) problem is to prescribe the location and capacity of each facility, select links used for transportation, and plan material flows through the supply chain, including production, inventory, backorder, and outsourcing levels. The objective is to minimize total cost. The network must be dynamically reconfigured (i.e., by opening facilities, expanding and/or contracting their capacities, and closing facilities) over time to accommodate changing trends in demand and/or costs. The problem involves a multi-period, multi-product, multi-echelon supply chain. Research objectives of this paper are a traditional formulation and a network-based model of the DSCR problem; tests to promote intuitive interpretation of our models; tests to identify computational characteristics of each model to determine if one offers superior solvability; and tests to identify sensitivity of run time relative to primary parameters.