Development of the Conceptual Model and Formulation of a Mathematical Model for Supply Chain in South African Automotive Industry

Abstract

Effective management of the supply chain structure is crucial in gaining a competitive edge. This work considers the development of the conceptual model as well as the formulation of a mathematical model for the supply chain of the automotive industry. The major players in the conceptual model consists of the primary supplier (Tier 1), intermediary supplier (Tier 2) as well as the Original Equipment Manufacturer (OEM), secondary supplier (dealer) and the end user. Prominent amongst other, constraints the objective function, which is subjected to the challenges of globalization, mass customization and dynamic changes in demand and supply, product and quality requirements with their associated risk. This resulted in a transportation problem with linear objectives and constraints. The solution provided a simple algorithm for supply chain management. This enhances effective decision-making, improves logistics and information flow with resulting improvement in the overall efficiency of the system at optimum cost.