Robust supply chain design mechanisms: Applications to risk management, coordination, and multiple-modular design

This thesis investigates three mechanisms to meet three challenges in designing a robust global supply chain. The first mechanism is using risk management tools to manage the challenge of the exchange rate risk brought by the accelerated integration of global economy. A dynamic finite-capacity model is suggested to study operational hedging and financial hedging of a Multi-national Risk-averse Newsvendor, who may produce and sell the product both at home and overseas. The optimal production and transshipment decisions and the optimal financial hedging decisions are fully characterized. Operational hedging is shown to be a more effective tool than financial hedging in most situations. The second mechanism is a restrictive strategy designed to improve coordination in a decentralized supply chain. The supply chain consists of one retailer and one supplier. The strategy enables the supplier to make significant cost reduction in inventory holding and backlogging and can bring significant savings to the cost of the whole supply chain in most situations. The third mechanism is use of a multiple-modular design to meet the challenge of achieving the product customization without sacrificing the economy of scale. A more reliable and fast algorithm is developed for some multiple-modular design problems.