An optimization model for distribution network design with uncertain customer demands and production capacity

In this paper, a fuzzy linear programming model for bi-level distribution network design in supply chain management (SCM) is proposed, in which both customer demands for products and production capacity of branch plants are treated as fuzzy parameters. Then a fuzzy chance constrained programming model is presented to denote the problem further. The ways to convert chance constraints to their respective crisp equivalents are also discussed. To speed up the process of solving the problem, a heuristic method is combined with conventional branch and bound algorithm and satisfactory results have been achieved. A numerical example is given to illustrate the proposed model at the end of the paper.