Supply Optimization Model in the Hierarchical Geographically Distributed Organization

Abstract

The strategic importance of the procurement function in the large organizations management requires using effective tools by the logistics management to justify decisions in the supply process. The architecture features of hierarchical geographically distributed organizations allow the use of a hybrid supply scheme that rationally combines the advantages of centralized and decentralized purchasing and supply management (PSM). The article suggests a supply optimization model in the hierarchical geographically distributed organization (HGDO), reflecting the features of a complex, multifactorial and multi-stage procurement process. The model allows to find the optimal options for purchasing and supplying products for the criterion of minimizing the total logistics costs that characterize this process for the entire period of planning HGDO logistics support, taking into account the values of the various parameters of participants and the logistics functions of the procurement process over each period of time. The model is an effective tool for supporting and coordinating decisions made by logistics managers at different levels of management of HGDO based on numerous options for purchasing and supplying products and their budgeting in conditions of the dynamics and diversity of internal and external factors of influence.