Inventory consideration and management in two supply chain problems

Ph.DDOCTOR OF PHILOSOPH

STRATEGIC DECISION MAKING IN SUPPLY CHAINS UNDER RISK OF DISRUPTIONS

Ph.DDOCTOR OF PHILOSOPH

Location-allocation modelling for Indonesian multi-echelon LPG supply chain

This research is to design the Indonesian LPG distribution system through Location-allocation modelling taking into account the existing facilities. Location-allocation model is developed in fixed charge capacitated location-allocation problem considering transportation and inventory decisions. Multi echelon LPG distribution system is considered to be modelled from regional warehouse to agents. The objective of this research is to determine the candidate locations of regional warehouses and feeder filling stations optimally and evaluate the implications of the future changes as sensitivity analysis. The optimal result found that the location-allocation model for the proposed distribution system results a better outputs on associated distribution costs than in the existing distribution system. The global optimal shows that in the proposed distribution model, total distribution cost from echelon 1 to 4 is lower than in the existing distribution system. Meanwhile, the service level, which is represented by the percentage of LPG shortage, is also lower, about 28 per cent lower than the existing distribution system. Four scenarios of different facility location numbers such as 9, 12, 17 and 18 FFSs are applied in the model. It is found that there is a trade-offs between location adjustment, location-allocation costs and service level. Comparing to the optimal results, less number of FFS decreases transportation and inventory cost that leads the decrease of total distribution cost. It is also observed that service level which is represented by the number of LPG shortages in the distribution system elevates as the number of FFS decreases. Furthermore, the implication of increasing demand to the proposed model reveals different results. It is found that the increasing demand which is projected by Pertamina for the next four years impact significantly on the location-allocation decisions. It is reported that the projected potential FFSs locations and LPG allocation changes as LPG demand increase. As consequences, the associated distribution costs as fixed cost, inventory and transportation cost also increase. The same phenomenon also occurs in the investigation between service level applied in the echelon 4, associated location-allocation costs and LPG shortage in the distribution system. This research also considers direct and indirect distribution system between echelon 2, 3 and 4, in which FFS is not only allowed to supply LPG to FS, but also to agents. The model of this research could contribute for further research in location-allocation problem in term of the hierarchical distribution system and the integration of other logistics aspects into the model