Extending analytical target cascading for optimal configuration of supply chains with alternative autonomous suppliers

Analytical target cascading (ATC) is capable of solving the supply chain configuration (SCC) problem in a decentralized manner by decomposing the entire supply chain into stages and formulating sub-problems associated with stages in separate ATC elements. This paper considers a supply chain where alternative suppliers of a stage are entitled to autonomous decision rights for configuring their respective upstream supply chain. These alternative suppliers form "OR" ATC elements where only one will be selected and configured in the supply chain. The standard ATC method is unable to deal with this type of SCC problems. This paper discusses how such a standard ATC method can be extended to accommodate "OR" elements, in terms of working logic and mathematical formulation. By the extension, the alternative selection of "OR" elements will be integrated into the target cascading process, and the selection criteria accord with the overall optimization objectives. Two case studies are used to demonstrate how and how well the extended ATC method works respectively. Factors that affect the selection results of "OR" elements are also identified through sensitivity analyses. (c) 2008 Elsevier B.V. All rights reserved.