The optimization model of logistic service of trade enterprise

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MAGAZINE №6 (71) December 2015

AUTHOR  

RYBAKOV D.S.

Deputy Logistics Director, «Formula of Space»
Postgraduate student, Department of Information Economic & Management Systems, Institute of Industrial Economics and Management, Peter the Great St. Petersburg Polytechnic University (St. Petersburg, Russia)

 

CATEGORY   Logistics services Management  Optimization and economic-mathematical modeling  Corporate logistics retailers 

 

ABSTRACT

 

The concept of cross-functional coordination defines the interaction of business units, which gives the overall optimal results of the company. Difficulties associated with the various units interaction are typical for enterprises of different economy sectors. One of the most important issues in trade enterprises is the problem of marketing and logistics departments’ interaction in determining the optimum level of customer service. The problem is in searching a balance between the level of logistic service provided to consumers, and the level of total logistic costs associated with maintaining a defined level of service. The purpose of this study is to develop a mathematical optimization model of logistic service of trade enterprises. It is assumed that logistic service of the enterprise has a number of components (indicators) of service, each of which has different variants (possible values). Implementation of the service component in a particular variant affects the values of revenue and total costs of the enterprise. It is necessary to find such combination of service components variants, which will provide the maximum profit for trade enterprise. To achieve this goal the analysis of the trade enterprise external environment is carried out; conceptual and structural optimization models are developed. On their basis the mathematical model of linear programming (LP) is developed. The LP model is tested on a numerical example, so a tabular model is also created. For the stage-by-stage solution of the optimization problem, the LP model is transformed to dynamic programming model. The limits of models applicability are defined. In the study a mathematical model of linear programming with Boolean variables, which provides finding optimal variants of logistic service components and complies with the restrictions, is created. As an alternative, a dynamic programming model is developed. An important advantage of this model is the possibility, during the phased decision-making, to implement a satisfactory solution, from the decision-maker point of view, and not mathematically optimal solution. The progress and results of the study show that total logistic costs, which are the main component of models, require detailing, and the process of their formation - definition of mathematical ratios, with the aim of developing integrated model for determining the optimal level of service and costs of subsystems of the trade enterprise logistics system.

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