Raw material management for rubber parts manufacturing supply chain using the LPSC model

Abstract

The paper proposes a new raw material cost management concept in the rubber parts supply chain using the Linear Programming Sharing Cost (LPSC). Rubber parts are widely used in the auto parts industry. There are a variety of product models and material types as well as produced by several subcontractors in the 2nd Tier companies. However, the whole chain controls overall cost management as the 1st Tier company. Cost-effective models are more important in the competitive era.The research methodology combined linear programming (LP) with sharing cost (SC) and was applied to inventory management. The LPSC model is developed to deal with Tier 1 companies linked with Tier 2 companies of the subcontractors. The LPSC is combined with the EOQ inventory management model.A new approach has been developed to reduce the cost of raw material management in the rubber part supply chain.The limitation of the model development is that it does not yet have real-time control of the supply chain management system.The conceptual idea was introduced to Thailand's automotive rubber part supply chain and accepted for testing with the pilot test of actual orders.The paper presents the new conceptual raw material cost management model in the automotive rubber part supply chain. The LPSC combined with EOQ is effective, increases value to the supply chain, and simultaneously reduces waste and overproduction.