Inventory Replenishment from a Single Supplier to Multiple Retailers in Rural Area in Supply Chain

Abstract

Supply chain management (SCM) is the management of operations that are involved in the procurement of raw materials, its processing into finished goods, and distribution to the end consumer. In order to maximize profits in the supply chain, more customers should be explored from the rural areas but there is difficulty in reaching the customers due to road network accessibility for heavy loaded trucks. Our objective seeks to find out the optimum quantity and optimal cost required by the supplier and customer to maximize the supply chain profit. We applied a quantity-based mathematical model with renewal theory and shipment consolidation to obtain the profit function in the supply chain system. Then, we presented a solution to the model to determine the optimal solution in the supply chain. Our results show that the demand rate and the supply chain’s profit are higher, especially for the more retailers demand. Therefore, involving small vehicles for delivery of products to customers into areas where road network accessibility is difficult for heavy trucks is advantageous for the supply chain.