Mitigating Supply Chain Tardiness Risks in OEM Milk-Run Operations

Abstract

The objective of this study is to investigate an optimal vehicle routing scheme to perform an OEM milk-run pickup service over a regional road network. The manufacturing of components is subject to varying tardiness among suppliers when fulfilling OEM orders. This often leads to non-accomplished orders at the end of the vehicle cycle time since the transport operation, predominantly composed by random variables, must comply with a strict delivery time limit set up by the OEM company. The mathematical model searches for the optimal vehicle routing sequence, together with searching for the best tardiness tolerance level that minimizes the sum of penalty costs levied against faulty suppliers, and transport expenses.