Joint decision-making of product family configuration and order allocation by coordinating suppliers under disruption risks

Although simultaneous configuration of product family and supply chains under disruption risks has been studied, the protection strategy to mitigate the impact of disruption and the supplier's capacity constraint was still not well considered. This paper formulates a bi-level programming model for joint decision-making of product family configuration and order allocation (PCOA), in which the coordination strategy and the protection strategy are used to coordinate capacity-constrained suppliers and reduce supply chains risks, respectively. The upper level seeks for an optimal product configuration by maximising the equivalent utility value per cost of an entire product family. The lower level optimises the order allocation and the protection scheme to minimise the unit supply chain cost. Then, a bi-level optimisation algorithm GA-BAGA, which nested a two-stage method integrated Backtracking Algorithm and Genetic Algorithm in the upper Genetic Algorithm evolution, is developed to solve the proposed PCOA model. A case study of AGV forklift clarifies that the bi-level optimisation is feasible and effective for PCOA problem, and use of the coordination strategy and the protection strategy can reduce the supply chain cost and increase the utility value per cost.