Authors: Chrissoleon Papadopoulos, Eleni Gavriel, Thomas Kalotychos, Agelos Bibos

Title: Modeling supply chains aiming at customer satisfaction: A simulation and a mathematical programming approach

Abstract

The aim of this study is to develop a generic supply chain model that can easily be modified and implemented in the market. The main target of the model is the achievement of a desired service level for the customer demand, by simultaneously optimizing profit and costs.

A supply network with four main nodes before the end customer is examined, with the nodes being: The supplier, the manufacturer, the distributors and the retailers. Each of the nodes has three objectives to satisfy: maximize the profit and customer satisfaction and at the same time minimize holding, transportation and 3PL costs. While the customer satisfaction is guaranteed, the maximization of profits is achieved by minimizing the relevant costs.

Two models are built: A mathematical programming model which is solved using the GAMS (edition 24.1.3) software package and a simulation model which is implemented in Simul8 (the educational edition).

By combining the two approaches (mathematical programming and simulation) we were able to get results applicable to real life situations, as demonstrated by a case study of a real company. These two models were applied in a Greek company which led to 3-15% decrease of the inventory levels in their three warehouses.