OPTIMIZATION OF THE FULL VALUE OF CONTRACTS WITH SUPPLIERS BASED ON ECONOMIC-MATHEMATICAL MODELING

Abstract

The paper states the problem of evaluation of total minimum contract value including transaction costs of an industrial enterprise when distributing an order among several suppliers. We present the model, where transaction costs on opportunism reduction are the control parameter. Numerical experi- ments were carried out. The paper states the optimization problem for determination of minimum total value of contracts, considering transaction costs of an industrial enterprise in case of diversification the order among several suppliers. Transaction costs are divided into three groups: the costs of information search about the supplier including qualifying selection of the suppliers; negotiation costs with the sup- plier and costs of supplier opportunism reduction. We present the model where the total contract value consists of the value of the delivered goods, transaction costs and losses in case of non-delivery of goods. The model also takes into account probable losses from both passive and active opportunism. A number of numerical experiments was carried out. That allowed to establish the existence of a minimum for the target function and showed the stability of the model for changes of input parameters.