A Genetic Algorithm Approach for TOC-based Supply Chain Coordination

A supply chain is a network of retailers, distributors, manufacturers, and suppliers cooperating to satisfy customers demands. In traditional business environments, each business tries to minimize its costs based on its own cost structure, regardless of other SC participants. However, most decisions made by each SC members are based on the profitability of their own. In this paper, we consider a two-level supply chain in which retailer orders exceeds the suppliers capacity. To balance supply and demand, we proposed a coordination mechanism based on Theory of Constraints (TOC) in face of meeting peak demand in certain period for the whole system, and Genetic algorithm(GA) has been selected in solving the optimal model. Furthermore, a numerical example has been implemented to demonstrate the efficiency of our method.