Estimating the fully burdened cost of supply in a self-sustaining supply chain using an input-output model

Abstract

Armed forces of many countries conduct various operations both at home and worldwide. These operations are conducted not only in areas where procurement is viable, but also in areas where commodities consumed by the logistics activities are not locally available. Estimating and calculating the fully burdened cost of supply in such areas where commodities consumed by the logistics activities are not locally available has become a major research and study field. This study focuses on the effects of change in vehicle fuel consumption rates on fully burdened cost of supplies in a self-sustaining supply chain and how the existence of demand at intermediate nodes affects the fully burdened cost of supplies. After modeling five different scenarios, the effects of changes in the size of convoy and delivery system were analyzed by comparing the results of each scenario. The results of this analysis show that small convoys in supply chains are more efficient than big convoys, and the fuel consumption rate of vehicles is so crucial that it should not be disregarded when estimating fully burdened cost of fuel.