Optimization methods and models supplier selection for n-product under uncertainty: A simulation-based optimization method

The paper considers supplier selection problem for N-product under uncertainty, that is, variable lead time of suppliers and stochastic demand. The problem is a multi-level problem that includes both strategic and operational level. And the inventory system of the Supply Chain (SC), which consists of costs of ordering and receiving order, purchasing cost and shortage cost, is the key factor for the problem. A simulation-based optimization method is proposed to solve it. More specially, an inventory model under variable lead time and random demand, such as, demand with a normal distribution, is presented and a genetic algorithm with disperse-event simulation is developed for it to find the satisfying suppliers from a set of pre-selected candidates and at the same time decide the order strategy, including the reorder level and order quality. A numerical example is attached to illustrate the method.