Design and Optimization of a Two-Tier Supply Chain Network Under Demand Uncertainty Using Genetic Algorithm and Particle Swarm Optimization

Supply chain management (SCM) involves complex coordination among multiple actors under demand uncertainty. However, most existing studies focus on simplified network structures that fail to capture all relevant dimensions of real-world supply chains or assume deterministic demand. This study proposes a comprehensive stochastic bi-level optimization framework for a multi-factory, multi-retailer, multi-customer, and multi-product supply chain network. The model captures the hierarchical interaction between decision-makers, where the production facility owner acts as the leader and the retailer as the follower, and jointly optimizes profit across both levels. To efficiently solve the resulting bi-level problem, two tailored metaheuristic solution approaches—a two-tier genetic algorithm (TT-GA) and a two-tier particle swarm optimization (TT-PSO)—are developed. Computational experiments across multiple scenarios demonstrate that TT-PSO outperforms TT-GA in Scenarios 1 and 2, achieving overall profit improvements of 6.46% and 0.76%, respectively, while TT-GA yields superior performance in Scenario 3 with a 2.80% profit improvement. The proposed framework provides decision-makers with a robust and practical tool for improving profitability and operational efficiency in complex, uncertain supply chain environments.