Optimization in Supply Chain Design of Assembled Products

HEPCO is an Iranian corporation that manufactures construction equipment and it holds a supply chain with a traditional non-integrated approach. The materials come from four different sources including the engineering and parts company, purchase from domestic vendors, purchase from international vendors, and the company supplies the materials and components needed for assembling of products and delivering to customers. Having a non-integrated supply chain has led to an increase in total cost. Therefore, in order to reduce supply chain cost in this company, a three-level model including suppliers, manufacturers and customers was used. Different ways also were applied to minimize chain cost, including purchase cost, transportation cost, inventory cost, assembly cost, and shortage cost that they used an integer linear mathematical model. The results of proposed model were compared with the actual amount of variables in the study period, which indicate a significant reduction in the cost of proposed model relative to the conventional methods.