Integrated strategic and tactical supply chain planning with price-sensitive demands

M. Fattahi, M. Mahootchi*, S. M. Moattar Husseini

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

23 Citations (Scopus)


This paper deals with the supply chain network design and planning for a multi-commodity and multi-layer network over a planning horizon with multiple periods in which demands of customer zones are considered to be price dependent. These prices determine the demands using plausible price–demand relationships of customer zones. The net income of the supply chain is maximized, while satisfying budget constraints for investment in network design. In addition, a new approach is considered for capacity planning to make the problem more realistic. In this regard, when production plants are opened and expanded, capacity options are taken into account for manufacturing operations. Furthermore, several aspects relevant to real world applications are captured in the problem. Different interconnected time periods in the planning horizon are considered for strategic and tactical decisions in the problem and then, a mixed-integer linear programming (MILP) model is developed. The performance and applications of the model are investigated by several test problems with reasonable sizes. The numerical results illustrate that obtained solutions after solving the MILP model by using CPLEX solver are acceptable. Moreover, using an alternative pricing approach, a tight upper bound is provided for the problem. In addition, a deep sensitivity analysis is conducted to show the validity and performance of the proposed model.
Original languageEnglish
Pages (from-to)423-456
Number of pages24
JournalAnnals of Operations Research
Issue number2
Early online date18 Jun 2015
Publication statusPublished - 1 Jul 2016
Externally publishedYes


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