Abstract:

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The objective of this research is to develop a supply chain model which incorporates fixed shipment and tariff costs at each stage of the supply chain in order to determine total minimum shipment cost at the end of a planning horizon. While the existing models being expanded in this research use forward recursive method of dynamic programming, the proposed model uses the backward approach which has lower suboptimal costs in between the stages. We observe that though the total minimum cost is the same for both the proposed and the existing model algorithms, the suboptimal costs in the proposed model are lower than the corresponding suboptimal costs in the existing model. This is one of the advantages of the proposed model compared to the existing models since it enhances early detention of unprofitable shipping patterns in the supply chain system. The algorithm of the model also has advantage of batch shipment at certain periods of computation. This assists policy makers to plan for shipment pattern that will reduce transportation cost and maximize profit of the organization.

Keyward(s): products, supply, consumers, shipment cost, tariff cost.

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