Multi-echelon supply chain network design in agile manufacturing

Feng Pan, Rakesh Nagi

Research output: Contribution to journalArticlepeer-review


In this paper, we consider a supply chain network design problem in an agile manufacturing scenario with multiple echelons and multiple periods under a situation where multiple customers have heavy demands. Decisions in our supply chain design problem include selection of one or more companies in each echelon, production, inventory, and transportation. We formulate the problem integrating all decisions to minimize the total operational costs including fixed alliance costs between two companies, production, raw material holding, finished products holding, and transportation costs under production and transportation capacity limits. A Lagrangian heuristic is proposed in this paper. Optimizing a Lagrangian relaxation problem provides a lower bound, while a feasible solution is generated by adjustment techniques based on the solution of subproblems at each iteration. Computational results indicate the high quality solutions with less than 5% optimality gap are provided quickly by the approach in this paper. Further, compared to initiative managerial alternatives, an improvement of 15% to 25% is not unusual in certain cases for the proposed approach.

Original languageEnglish (US)
Pages (from-to)969-983
Number of pages15
JournalOmega (United Kingdom)
Issue number6
StatePublished - Dec 2013
Externally publishedYes


  • Agile manufacturing
  • Lagrangian heuristic
  • Multi-echelon
  • Supply chain network design

ASJC Scopus subject areas

  • Strategy and Management
  • Management Science and Operations Research
  • Information Systems and Management


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