Retailer driven supply chain with limited transportation capacities and supply demand market index

Abstract

This paper addresses the problem of allocating the optimal shipping rates within a supply chain (SC) of minimum collaboration between its partners in a stochastic demand environment. Particularly, we consider a SC that consists of a set of manufacturers, distribution centres and retailers. The logistic service provider (LSP) limited transportation capacities restrict the retailers' aspiration to meet the entire demands. The objective function is to determine the optimal shipping rates that maximise the retailers' returns subject to the available LSP capacities and stochastic demand. An algorithm is presented to solve the optimisation model by finding the optimal rates. The algorithm works in a decentralised mode at the retailers' side. Intensive simulation experiments are conducted to test the model and the operational algorithm. The algorithm can be implemented at the retailer side without having to access the network global parameters except the knowledge of the product lead-times.Reference to this paper should be made as follows: Dalalah, D.M. and Aldaihani, M.M. (2016) 'Retailer driven supply chain with limited transportation capacities and supply demand market index', Int.