Optimization Supply Chain Strategy of Tire Manufacturing Using Goal Programming Method
9 Pages Posted: 25 Sep 2018
Date Written: September 12, 2018
The pressure of the supply chain to reduce cost, manage shortened order-to-delivery cycles, ensure a highly efficient logistics network to store, and distribute finish products are some of the key challenges that the tire industry faces. Besides those challenges, tire manufacturers still have to deal with raw material supply, particularly natural rubber as the unique material. The natural rubber is common for all products that produce by tire manufacturers such as commercial tires and consumer tires. This paper focuses on creating the most efficient supply chain strategy in tire manufacturing by managing all constraints, including the natural rubber supply. The aims are to find the best scenario from a natural rubber that has been processed then become the valuable products that bring gain for the company. In this paper, 11 scenarios are created to determine the combination of all products that fit with the gaining profit and calculated using Goal Programming Method to find minimum deviation between the target value and all constraints. The data source used in this research based on last three years from one of largest tire manufacturing in southeast Asia. The results show that the most effective strategy is to optimize the supply of natural rubber to produce passenger car radial tires and truck & bus radial tires. This strategy has the most significant gap between the net sales and the cost of goods sold, as well as the smallest variation of inventory and transportation costs in the baseline scenario.
Keywords: Supply chain management, Goal programming, Tire Manufacturing, Natural rubber
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