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This paper deals with developing a mathematical optimization approach of lot sizing decision for coordination of
multiple milk collection centers, milk plant and multiple milk booths in an Indian dairy supply chain. The paper
also provides the network structure with Strengths, Weaknesses, Opportunities and Threats (SWOT) analysis
of an Indian dairy supply chain. It is based on some important practical considerations, such as total cost of
ownership associated with the milk collection centers, milk plant and milk booths, ordering, inventory, net price,
delivery, quality and information processing. The total cost of ownership quantifies all costs related to the
coordinating milk collection centers, milk plant and milk booths. It is based on the activities and cost drivers
determined by an activity-based costing system. The proposed model has been validated by means of sample data
for a dairy supply chain situated in Northern India. Three cases are discussed: Case 1: When the milk collection
centers and milk booths cooperate and agree to the joint optimal lot size for minimizing the total cost of supply
chain; Case 2: The milk collection centers force optimal lot size on the milk booths, which minimizes the dairy
farm costs disregarding the milk booth costs; and Case 3: The milk booths force optimal lot size on the milk
collection centers, which minimizes the milk booth costs disregarding the dairy farm costs. The effects of changes
in model parameters are explored and the realistic strategy arising out of the same has also been provided.
Indian Dairy Limited, New Delhi (IDL, New Delhi)1 collects 600,000 liter of milk every
day from four cooperative federations (Haryana, Punjab, Rajasthan and Uttar Pradesh),
and converts the milk into branded, packaged products, and delivers goods worth
Rs. 5 cr to over 1,500 retail milk booth outlets across the Delhi region. The IDL, New
Delhi supply chain is one of the most complicated ones. How do managers at IDL, New
Delhi prevent the milk from souring? How do managers at IDL, New Delhi manage to
meet the demands of customers on time?
The rest of this paper is organized as follows: It reviews the literature of quantitative
methods of lot size decisions, provides contribution of earlier researches to lot size
decisions, describes mathematical optimization model for solving the lot sizing decision
of multiple milk collection centers, and gives milk plant and multiple milk booths
coordination for milk item. The following section provides an insight into the buying,
collection and processing of milk at IDL, distribution of milk from IDL, and SWOT
analysis of IDL. The next section takes into account the Total Cost of Ownership (TCO)
related to coordinating multiple milk collection centers and multiple milk booths. The
following section discusses the results of the approach and presents the challenges of
IDL and concluding remarks. |
