Original Research

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

M. Sepehri, K. Fayazbakhsh
South African Journal of Business Management | Vol 43, No 1 | a178 | DOI: https://doi.org/10.4102/sajbm.v43i1.178 | © 2018 M. Sepehri, K. Fayazbakhsh | This work is licensed under CC Attribution 4.0
Submitted: 13 April 2018 | Published: 31 March 2012

About the author(s)

M. Sepehri, Graduate School of Management and Economics Sharif University of Technology, Iran, Islamic Republic of
K. Fayazbakhsh, Department of Computer Engineering and IT Amirkabir University of Technology, Iran, Islamic Republic of

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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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1. What modelling research on supply chain collaboration informs us? Identifying key themes and future directions through a literature review
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doi: 10.1080/00207543.2018.1535204