Solution proposals for bilevel stochastic transportation problems

Transportation is an important component of the supply chain. Supply chain is a system consists of suppliers, manufacturers, distributors, retailers, transporters who act in a coordinated manner to accomplish product development, marketing, distribution and warehousing tasks and wish to provide a competitive advantage. Supply chain management related problems include uncertain parameters due to possible failures in production line, fluctuations in unit prices and demands. The impact of volatility can be captured by using probability distribution functions which are statistically calculated from historical data. Stochastic programming is a technique based on statistical decision theory and concerned with computationally difficult problems under uncertainty. The original stochastic problem is transformedinto equivalent deterministic problem to introduce randomness by taking into account all possible scenarios.Early applications of stochastic programming include stochastic transportation problem. With each customer demand a random variable, the problem is to determine optimal quantities to be sent to customers via linear penalties forany shortage andsurplus. The objective is to minimize the sum of transportation costs and expected penalty costs.A government in a distribution network, a service provider in a communication market or a supplier in a supply chain acts as a leader and makes his decision first. As followers, users of those networks, competitors or retailers use that decision as an input to form their strategy. Multi-level programming and game theory address that kind of hierarchical decision making problems and tries to find Stackelberg (equilibrium) solutions.In this thesis, we restrict ourselves into distribution plans of hierarchical supply chains under stochastic environments. After obtaining deterministic equivalents of original two level stochastic transportation problems, we use efficient methods proposed for bilevel programming. In particular, a decentralized supply chain is considered to transport a perishable product which can be deteriorated during storage or transportation.