Product Swapping and Transfer Sales between Suppliers in a Balanced Network

Abstract

In this paper we present a preliminary deterministic mathematical model of cooperative supply chain network of suppliers and customers. We consider horizontal cooperation among suppliers such that they can swap their orders to reduce their transportation cost and they can purchase products from each other to reduce their shortage cost. Hence the objective is to examine the potential swap and horizontal purchasing operations between suppliers under perfect information sharing. Assuming a balanced network in a single-period in which total capacity of suppliers is greater than or equal to the total demand of customers we conduct an empirical analysis for six suppliers and eight customers. The analysis suggests for many suppliers the benefits of order swapping and lateral purchasing.