Bilevel programming approach for manufacturing facility investment optimization with non-cooperative suppliers and customers

Dajun Yue, Fengqi You

Research output: Chapter in Book/Report/Conference proceedingConference contribution

Abstract

We propose a bilevel mixed-integer nonlinear programming (MINLP) model for the optimal decision-making in manufacturing facility investment considering non-cooperative suppliers and customers. Interactions among the supply chain participants are captured through a single-leader-multiple-follower Stackelberg game under the generalized Nash equilibrium assumption. Given a three-echelon superstructure, the lead manufacturer in the middle echelon first optimizes its design and operational decisions, including facility location, sizing, and technology selection, material input/output and price setting. The following suppliers and customers in the upstream and downstream then optimize their transactions with the manufacturer to maximize their individual profits. By replacing the lower level linear programs with their KKT conditions, we transform the bilevel MINLP into a single-level nonconvex MINLP, which is further globally optimized using an improved branch-and-refine algorithm. To illustrate the application, two case studies are presented.

Original languageEnglish (US)
Title of host publicationACC 2015 - 2015 American Control Conference
PublisherInstitute of Electrical and Electronics Engineers Inc.
Pages3925-3930
Number of pages6
ISBN (Electronic)9781479986842
DOIs
StatePublished - Jul 28 2015
Event2015 American Control Conference, ACC 2015 - Chicago, United States
Duration: Jul 1 2015Jul 3 2015

Publication series

NameProceedings of the American Control Conference
Volume2015-July
ISSN (Print)0743-1619

Other

Other2015 American Control Conference, ACC 2015
CountryUnited States
CityChicago
Period7/1/157/3/15

ASJC Scopus subject areas

  • Electrical and Electronic Engineering

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    Yue, D., & You, F. (2015). Bilevel programming approach for manufacturing facility investment optimization with non-cooperative suppliers and customers. In ACC 2015 - 2015 American Control Conference (pp. 3925-3930). [7171942] (Proceedings of the American Control Conference; Vol. 2015-July). Institute of Electrical and Electronics Engineers Inc.. https://doi.org/10.1109/ACC.2015.7171942