Title: Impact of aggregating supplies from single supplier to a cluster of producers: opportunities for 3PL service providers

Authors: Prashanth Kumar Rai, P.N. Ram Kumar, Appa Iyer Sivakumar, Peeyush Mehta, Ashok K. Mittal

Addresses: Indian Institute of Technology Kanpur, Kanpur, India. ' Indian Institute of Management Kozhikode, Kozhikode, India. ' School of Mechanical and Aerospace Engineering, Nanyang Technological University, Singapore. ' Indian Institute of Technology Kanpur, Kanpur, India. ' Indian Institute of Technology Kanpur, Kanpur, India

Abstract: A supply chain is a network of different entities, such as suppliers, manufacturers, distributors and retailers. Each supply chain member adopts a myopic policy for replenishment and production-related decisions to maximise its revenue or minimise its costs. It results in local optimisation and hence reduced overall supply chain performance. This work investigates the benefits of coordinating the production and distribution decisions in a scenario comprising single supplier and a cluster of multiple buyers. The problem is modelled as a mixed-integer linear programme. Factor analysis is conducted to identify dominant factors that favour the benefits of coordination. A heuristic procedure is developed to solve large problem instances in very less computational time. Encouraging results are obtained.

Keywords: supply chain coordination; joint replenishment; 3PL providers; MIP models; factor analysis; heuristics; third party logistics; supply chain management; SCM.

DOI: 10.1504/IJOR.2011.042505

International Journal of Operational Research, 2011 Vol.12 No.2, pp.192 - 206

Published online: 14 Feb 2015 *

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