Development of coordination system model on single-supplier multi-buyer for multi-item supply chain with probabilistic demand

Nowadays, the level of competition between supply chains is getting tighter and a good coordination system between supply chains members is very crucial in solving the issue. This paper focused on a model development of coordination system between single supplier and buyers in a supply chain as a solution. Proposed optimization model was designed to determine the optimal number of deliveries from a supplier to buyers in order to minimize the total cost over a planning horizon. Components of the total supply chain cost consist of transportation costs, handling costs of supplier and buyers and also stock out costs. In the proposed optimization model, the supplier can supply various types of items to retailers whose item demand patterns are probabilistic. Sensitivity analysis of the proposed model was conducted to test the effect of changes in transport costs, handling costs and production capacities of the supplier. The results of the sensitivity analysis showed a significant influence on the changes in the transportation cost, handling costs and production capacity to the decisions of the optimal numbers of product delivery for each item to the buyers.