Supply Chain Planning over Product Lifecycles

Abstract

Supply chain configurations should change over the lifecycle of the product. During the early stages expensive suppliers with greater reliability and flexibility are desirable in order to meet uncertain market requirements, whereas in later stages with steady and declining demand, low cost suppliers should be chosen. Given the extremely short and overlapping product lifecycles in the Hi-Tech industry, it becomes necessary to use formal planning models to manage such dynamic supply chain configurations. In this paper, we develop a mixed integer-programming model for integrated planning across the supply chain and show how such a model may be used for decision-making across the product lifecycle. We assume that all stakeholders in the supply chain share information on their capacities, schedules and cost structures. Based on this information the model addresses the issue of partner selection and planning for optimal profit. The model was solved using optimization tools from ILOG.