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

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Abstract

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.

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Sepehri, M., & Fayazbakhsh, K. (2012). A multi-period and multi-product optimizer for cooperative supply chains. South African Journal of Business Management, 43(1), 77–92. https://doi.org/10.4102/sajbm.v43i1.178

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