Mathematical programming model of cost optimization for supply chain from perspective of logistics provider

Received: 25 February 2012 Abstract Accepted: 10 May 2012 The article presents the problem of optimizing the supply chain from the perspective of a logistics provider and includes a mathematical model of multilevel cost optimization for a supply chain in the form of MILP (Mixed Integer Linear Programming). The costs of production, transport and distribution were adopted as an optimization criterion. Timing, volume, capacity and mode of transport were also taken into account. The model was implemented in the environment of LINGO ver. 12 package. The implementation details, the basics of LINGO as well as the results of the numerical tests are presented and discussed. The numerical experiments were carried out using sample data to show the possibilities of practical decision support and optimization of the supply chain. In addition, the article presents the current state of logistics outsourcing.

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