Supply-demand optimization in the product distribution process through the branching method

Abstract

Interaction and relationship between seller-buyer for the availability of certain products always involve the distribution process from suppliers to a number of customers so that demand at each destination is fulfilled. If the product cannot be fulfilled, the customer will find another supplier to meet the product’s shortcomings. Thus the supplier is trying to prevent the supply of other competitors of the same type. Effective logistical arrangements in the distribution of goods need to pay attention to the behavior characteristics of shipping costs. The purpose of this study is to minimize shipping costs with a distribution scheme that can optimize product loads. By using the Balinski linear approach, the problem of sending fixed costs can be solved by the branching method. The branching method gradually produces new problem-solving branches with different objective functions and constraints. Each value branch could be compared so that the optimal solution for the cost is found.