Comparison and Supply Chain Optimization for Vendor-Buyer Coordination System

Here, we consider single vendor-buyer model with multi-product and multi-customer and multi-facility location-production-distribution problem. It is assumed that the players of the supply chain are coordinated by sharing information. Vendor manufactures produce different products at different plants with limited capacities and then distribute the products to the consumers according to deterministic demands. A mixed integer linear fractional programming (MILFP) model is formulated and a solution approach for MILFP is discussed. Product distribution and allocation of different customers along with sensitivity of the key parameters and performance of the model are discussed through a numerical example. The results illustrate that profit achieved by the MILFP model is slightly higher than mixed integer programming (MIP) model. It is observed that increase in the opening cost decreases the profit obtained by both MILFP and MIP models. If the opening cost of a location decreases or increases, the demand and capacity of the location changes accordingly. The opening cost dramatically changes the demand rather than the capacity of the product. Finally, a conclusion is drawn in favor of the MILFP model as a relevant approach in a logistic model searching for the optimum solution.