A supply chain design model with unreliable supply

Uncertainties abound within a supply chain and have big impacts on its performance. We propose an integrated model for a three‐tiered supply chain network with one supplier, one or more facilities and retailers. This model takes into consideration the unreliable aspects of a supply chain. The properties of the optimal solution to the model are analyzed to reveal the impacts of supply uncertainty on supply chain design decisions. We also propose a general solution algorithm for this model. Computational experience is presented and discussed.