Agent-based simulation-optimization model for a bi-objective stochastic multi-period supply chain design problem

During the last decade, many researchers have been attracted to study the role of uncertainties in their supply chain designs. Two important uncertainties of a supply chain are demand uncertainty and supply disruption. The basic concept of the proposed model of this paper is based on the newsvendor problem. The model consists of many retailers and many suppliers as two types of autonomous agents that interact with each other considering demand and supply uncertainties. To cope with the uncertainties, retailers have three choices: a forward contract, an option contract, and purchasing from the spot market. Retailers maybe risk sensitive or risk neutral. A new simulation optimization approach is developed to find the best behavior of a risk sensitive retailer in contrast with the other risk neutral retailers during the multiple contract periods. In this model two objectives are defined to find the best behavior of the risk sensitive retailer: the maximization of the profit and the service level. In order to optimize the agent based simulation, an NSGA-II approach is used. The proposed simulation based NSGA-II is further developed in two directions: the one is different realization numbers of the uncertain parameters, and the other is preference points. Under the different preference points and different number of realizations, Pareto optimal solutions are discovered by the collaboration of the agents. Results of the numerical studies showed that adopting more risk averse policies during the contract periods will result in a larger service level and smaller profit rather than adopting more risk taking policies.