A multi-period and multi-product optimizer for cooperative supply chains

Members in a traditional supply chain compete to reduce their individual costs. But total cost is minimized in a cooperative, or a corporate managed, supply chain. A lower average cost and a lower cost variation are achieved by cooperative individual members in the long-run. The problem is formulate...

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Bibliographic Details
Published in:South African journal of business management 2012-03, Vol.43 (1), p.77-92
Main Authors: Sepehri, M, Fayazbakhsh, K
Format: Article
Language:English
Subjects:
Cooperation
Cost reduction
Costs
Just in time
Simulation
Studies
Supply chain management
Supply chains
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Summary:Members in a traditional supply chain compete to reduce their individual costs. But total cost is minimized in a cooperative, or a corporate managed, supply chain. A lower average cost and a lower cost variation are achieved by cooperative individual members in the long-run. The problem is formulated and solved as an integrated flow network. Previous research is expanded to include multi-period and multi-product cooperative supply chain with possibility of holding inventory in a multi-stage, multi-member setup. A Cooperative Supply Optimizer System (CSOS), a software-based coordination mechanism, is developed for large chains. It gathers operational information from members of the supply chain, and then guides them on ordering decisions for a minimum cost of the entire supply chain. Simulation results indicate an approximately 26% reduction in total supply chain costs, utilizing this formulation over a competitive setup. As the holding costs increase, the problem decomposes into single period (Just-in-time) again. The disturbing bullwhip effect disappears in cooperative supply chains.
ISSN:2078-5976
2078-5585
0378-9098
2078-5976
DOI:10.4102/sajbm.v43i1.178