Continuous development of companies in various sectors of the economy has led to an expansion of the processes they implement. With the increase in the number of logistic processes of the company, there is a need for their optimization, with a subsequent reduction in the costs of their provision. Logistic costs can reach up to forty-five percent of the company’s general administrative expenses. As of today, there are many approaches to setting and solving the problem for optimization of logistics systems. In this paper, the authors suggest a set of different strategies for selecting suppliers in the market, taking into account a number of constraints, in particular, the supplier’s required reliability, as well as the goods pricing strategy, provided that such goods are competitive. The main objective of the research is to solve the problem of the optimal choice of the quantity of goods in the order with supplier losses minimization. The goal is achieved by choosing the optimal or the so-called economical order size, at which the supplier’s losses will be minimal. To determine the optimal order size, a modified Harris-Wilson formula for the economic order quantity is used. Two types of the problem are considered: a model in the absence of supply disruption and a model with probable supply disruptions. Scenarios of a customer’s behavior are suggested for possible supply disruptions, such as the supplier equipment failure or transportation problems. Using the proposed algorithm, the customer can develop a relevant stock forming strategy.

Original languageEnglish
Title of host publicationConvergent Cognitive Information Technologies
EditorsVladimir Sukhomlin, Elena Zubareva
Place of PublicationCham
PublisherSpringer Nature
Pages142-149
Number of pages8
ISBN (Print)9783030374358
DOIs
StatePublished - 2020
Event3rd International Scientific Conference on Convergent Cognitive Information Technologies, Convergent 2018 - Moscow, Russian Federation
Duration: 29 Nov 20182 Dec 2018

Publication series

NameCommunications in Computer and Information Science
Volume1140
ISSN (Print)1865-0929
ISSN (Electronic)1865-0937

Conference

Conference3rd International Scientific Conference on Convergent Cognitive Information Technologies, Convergent 2018
Country/TerritoryRussian Federation
CityMoscow
Period29/11/182/12/18

    Scopus subject areas

  • Computer Science(all)
  • Mathematics(all)

    Research areas

  • Game theory approach, Loss minimization, Supply chain disruption

ID: 52353548