Financial Supply Chain Management with Transportation Policy under Controllable Lead Time

Abstract

Supply chain management (SCM) is the cooperation among suppliers, manufacturers, and retailers. Supply chain partners are linked with through material, finance, and information flows. However, recent research has been focused only on the material flow due to its’ visibility. Nowadays, the development of information technology has brought attention to the flow of information and finance. In this direction, the financial supply chain management studies are increased and focused to optimize the value of the supply chain. The optimization of the supply chain total cost can be achieved by utilizing the collaboration in a better way. The total cost of the supply chain consists of mainly the costs for the logistics, setup, inventory holding, and backorder. In the previous studies, two major factors were ignored: as the controllable lead time and the transportation policies. This dissertation considers two financial supply chain models: the first study is on a two-echelon supply chain model considering stochastic lead time, variable backorder rate, quality improvement of products, setup cost reduction of supplier, transportation discount, and trade-credit financing cost with single-setup-multi-delivery (SSMD) policy, and the second study is extended from the first model with carbon emission cost and carbon footprint cost with single-setup-multi-unequal lot delivery (SSMUD) policy. This dissertation provides a unique solution methodology to solve these nonlinear stochastic models. The optimal solutions of the proposed models are obtained by combining the nonlinear optimization method with Regula-Falsi method in a stochastic environment. The solution of the proposed models cannot be simply obtained by using nonlinear optimization techniques. Therefore, an iterative procedure is adopted to solve these models even though the solution provides globally optimum values of the considered decision variables, which minimize the cost. The results of the numerical experiments and sensitivity analysis are plainly shown that the optimum lot size belongs to the maximum range of transportation discount, which indicates that the supply chain is profitable forever for the purpose of transportation discount with the trade-credit financing, i.e, a step towards the sustainable supply chain is formed.