Optimisation-in-the-loop simulation of multi products single vendor-multi buyers supply chain systems with reactive lateral transhipment

Abstract

Considering that batik is one of the most popular products in Indonesia, it is important to analyse the supply chain system for batik products. In reality, the supply chain system for batik products enables orders between buyers to receive products more rapidly, allowing them to anticipate stock outs and obtain lower ordering costs than when ordering from vendors. It is referred to as reactive lateral transshipment. This paper discusses the development of a simulation-based stochastic optimisation model for a batik product supply chain system with multiproducts and single vendor-multi buyers. The utilised solution searching algorithm is a modified Genetic Algorithms (GA) executed in-loop with the developed simulation-based stochastic model. The results demonstrate that the proposed modified GA is able to provide a global optimum solution, allowing the proposed simulation-based stochastic model to reduce the joint total cost (JTC) of the investigated supply chain system by up to 19% when compared to the local optimisation model in each supply chain party.