A graph theory-based algorithm for a multi-echelon multi-period responsive supply chain network design with lateral-transshipments

A key decision in design of a supply chain is the configuration of the network. In this study, supply chain network design problem is investigated and an efficient solution approach is presented. Specifically, a heuristic graph theoretic-based algorithm is proposed for solving a multi-echelon responsive supply chain network design problem with lateral-transshipment among retailers. The possibility of lateral-transshipment is considered to increase the customer satisfaction by increasing the availability of the goods, and to reduce total inventory handling costs. Consideration of lateral transshipment provides a trade-off between transportation costs and inventory handling costs at the retailers. Graph theory is used to investigate and study the structure of the supply chain network and it is shown that the network can be reduced to a k-partite graph. The performance of the proposed approach is compared with an exact commercial solver on test problems. The results indicate that the proposed algorithm generates high-quality solutions in a reasonable time in comparison with the exact solver.