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Optimization of Internal Supply Chains for Multinational Companies

The service is intended for enterprises with subsidiaries in different countries or in zones with different tax laws.

On the basis of common supply chain model, our product forms the most optimal flow of goods and establishes transfer prices at the same time. It ensures maximization of profit lies within the limits of legislation for multinational companies with subsidiaries in different countries or zones with different tax laws. Contrary to traditional Linear Mathematical Model, we utilize Models of Quadratic Programming so that transfer prices and flow of goods are formed simultaneously.

Depending on the supply chain of the client, we offer the following mathematical models:

  • single phase production which uses distribution centers for delivering products to markets
  • double phase production in which prefabrication takes place at the first phase and full product is assembled at the second phase elsewhere
  • triple phase production
  • single phase production without distribution centers, in which the end product is delivered to the customer from the factory
  • single phase production with two echelons of distribution centers, when end products are delivered via complex routes, for example by sea with distribution centers at both sides
  • various models of double phase production in which there are more/less echelons of distribution centers
  • various models of triple phase production in which there are more/less echelons of distribution centers

According to our research, the more complicated the initial supply chain (a large number of points and lots of products to move), the greater the effect of optimization. For supply chains with mid size complexity (150 of points, up to 50 products), revenue that is obtained through global optimum is 4% higher.

We offer static optimization models that identify volumes of transfers between the nodes, methods of transportation, and corresponding transfer prices. When it is necessary to optimize for time (scheduled un-load time or process initiation time that is dependent on different delivery speeds on various routes), we can offer a dynamic model. In dynamic models, when evaluating revenues it is possible to account for fluctuating forecasted prices in various zones. The number of intervals in price forecasts as well as the total time-range of the forecast is tuned according to specific needs of the client.

Adaptation of our mathematical models and our numerical methods allows the client to shift from optimizing logistical parameters and costs to optimizing revenues. Dynamic models outperform static models when optimizing for revenue by several percentage points.