A model predictive control strategy for supply chain optimization

This paper describes a model predictive control strategy to find the optimal decision variables to maximize profit in supply chains with multiproduct, multiechelon distribution networks with multiproduct batch plants. The key features of this paper are: (1) a discrete time MILP dynamic model that considers the flow of material and information within the system; (2) a general dynamic optimization framework that simultaneously considers all the elements of the supply chain and their interactions; and (3), a rolling horizon approach to update the decision variables whenever changes affecting the supply chain arise. The paper compares the behavior of a supply chain under centralized and decentralized management approaches, and shows that the former yields better results, with profit increases of up to 15% as shown in an example problem.