Title: Total cost optimisation model for logistics systems of trading companies

Authors: Dmitriy S. Rybakov

Addresses: Department of Information Systems in Economics and Management, Institute of Industrial Management, Economics and Trade, Peter the Great St. Petersburg Polytechnic University, 29 Politechnicheskaya St., St. Petersburg, 195251, Russia

Abstract: The purpose of this research is to develop a model for optimising total logistics costs of a trading company. To achieve the aim, a logistics system has been analysed and, as a result, major subsystems, logistics processes and most substantial logistics costs have been identified. The results of the analysis have been used to elaborate conceptual and structural optimisation models. They have been further used to develop a mathematical model considering both direct and indirect costs. The mathematical model has been tested numerically, so a table model has been worked out. The research has resulted in a Boolean linear programming model for determining the values of the indicators of the order cycle time and stock level, ensuring optimal total logistics costs of a trading company. Strategic objectives have been decomposed into the goals of individual departments, expressed with the target values of the indicators of lead time and cargo turnover.

Keywords: optimisation models; total costs; logistics systems; LS; trading companies; total cost optimisation; logistics processes; logistics costs; mathematical models; direct costs; indirect costs; Boolean programming models; order cycle time; stock level; lead time; cargo turnover.

DOI: 10.1504/IJLSM.2017.084469

International Journal of Logistics Systems and Management, 2017 Vol.27 No.3, pp.318 - 342

Received: 05 Feb 2016
Accepted: 19 May 2016
Published online: 07 Jun 2017 *

Full-text access for editors Full-text access for subscribers Purchase this article Comment on this article