Operational Research (2022) 22:703–740

https://doi.org/10.1007/s12351-019-00540-x

ORIGINAL PAPER

Analysis of a two echelon supply chain with merging

suppliers, a storage area and a distribution center
with parallel channels

Michael Vidalis1 · Stelios Koukoumialos2 · Alexandros Diamantidis3   ·

George Blanas2

Received: 17 January 2019 / Revised: 7 October 2019 / Accepted: 9 December 2019 /

Published online: 20 December 2019
© Springer-Verlag GmbH Germany, part of Springer Nature 2019

Abstract
This paper examines a discrete material two echelon supply chain system. Multi-
ple reliable non identical merging suppliers send products to an intermediate stor-
age area which can in turn feed a distribution centre with parallel identical reliable
distribution channels. It is assumed that each merging supplier may have parallel
identical reliable supply channels. The service rate of each supplier and each iden-
tical channel at the distribution centre is assumed to be exponentially distributed.
The examined model is analyzed as a continuous time Markov process with discrete
states. An algorithm that can create the system’s transition probabilities matrix for
any value of its parameters is presented and various performance measures are cal-
culated. The comparison of the proposed method with simulation showed that the
proposed algorithm provides very accurate estimations of the system’s performance
measures. Additionally the optimal values of the system’s parameters to optimize its
various performance measures are also explored thoroughly.

Keywords  Supply chain management · Merge systems · Performance evaluation

* Alexandros Diamantidis
adiama@econ.auth.gr
Michael Vidalis
mvid@ba.aegean.gr
Stelios Koukoumialos
skoukoum@teilar.gr
George Blanas
blanas@teilar.gr
1
Department of Business Administration, University of Aegean, Chios, Greece
2
Department of Business Administration, T.E.I. of Thessaly, Larissa, Greece
3
Department of Economics, Aristotle University of Thessaloniki, Thessaloniki, Greece

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 704 M. Vidalis et al.

1 Introduction and literature review

A supply chain (SC) usually has several echelons that can be connected to each
other. The performance of an echelon can affect directly the performance of the
rest echelons of the SC. The main target of the supply chain management (SCM)
is to control the flows between its stages in order to maximize the total profit-
ability of the SC. Usually the parameters of the SC that affect its performance and
behavior are the number of suppliers, the distribution centers capacities and the
capacities of the intermediate storage areas. Another important factor is the exist-
ence or not of stochastic processes that describe the service rates of the suppliers
and the distribution centers.
The randomness of the processes involved makes necessary the use of a sto-
chastic evaluative model that can estimate various performance measures. Evalu-
ative models make use of input data such as the system parameters and provide
as an output the performance evaluation of the system. The evaluative models
can be combined with generative models to create a tool for the optimal design
of production systems or supply chains. The goal of this study is the creation of
an evaluative model for the estimation of the considered system’s performance
measures.
A push based supply chain with suppliers, intermediate buffers/storage areas
and distribution centres, can be viewed as a push flow line where the suppliers of
the supply chain correspond to the workstations of the flow line and the distribu-
tion centres of the supply chain, correspond to workstations with parallel serv-
ers of the flow line. As a result of this correspondence, the analysis of a supply
chain can be done using the same techniques and literature with those used for the
analysis of manufacturing systems. Therefore the considered system can be con-
sidered as a two-stage queuing network with a finite storage area that can be also
used for production, telecommunications, and also for inventory management if
the assumptions can be justified depending on the application. Moreover merging
suppliers can be used to model and analyze assembly supply chains where com-
plementary parts from different suppliers can be assembled together into a new
product and then distributed through a distribution centre to the final customers.
In contradiction to the classical serial systems, merge systems haven’t been
studied thoroughly in the literature,. Moreover, the analysis of push merge sys-
tems where each merging workstation may have parallel servers draws a little
attention in the literature.
Regarding the analysis of systems with merge operations, Tan (2001) studied a
three stations push model with a unique storage area, merge operations and con-
tinuous flow of material. The times to failure and to repair were exponentially
distributed. The methodology used for the analysis of the considered model was
renewal theory in conjunction with level crossing analysis.
Helber and Mehrtens (2003) examined a three stations one buffer merge sys-
tem for the case of continuous flow of material. They assumed machine specific
processing times, while the times to failure and repair were assumed to be expo-
nentially distributed.

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Analysis of a two echelon supply chain with merging suppliers,… 705

Diamantidis et al. (2004), analyzed using a discrete state, discrete time Markov
chain a three machine one buffer merge system with discrete flow of material. They
assumed that the processing times were fixed and equal for all machines. Geometri-
cally distributed failure and repair rates of the machines were also assumed. A simi-
lar model with non identical merging machines which have exponential failure and
repair rates was examined by Quazene et al. (2013). Two transformation techniques
were used and compared. The first technique replaced the parallel machines on the
first stage by an equivalent machine, while the second one used overlapping decom-
position approach which decomposed the original line into two serial lines.
Liu and Li (2009, 2010) analyzed systems with split and merge operations operat-
ing with Bernoulli and exponential machine reliability assumptions using various
processing policies. They derived the recursive procedures for the performance anal-
ysis and they proved the convergence of the procedures along with the uniqueness of
the solutions.
Li et al. (2009), summarized recent studies in the area and they discussed approx-
imated methods to analyze complicated systems, with various topologies including
assembly/disassembly, split and merge and closed-loop systems. Moreover they pro-
posed future research topics from the automotive production lines.
Vidalis et  al. (2012), considered a merge supply chain with two non identical
reliable suppliers a distribution center and a shared buffer. The supply rate of each
supplier and the service rate of the distribution center were assumed to follow the
Erlang distribution. They proposed an analytical model based on a discrete state,
continuous time Markov chain in order to evaluate various performance measures of
the examined system.
Geranios et al. (2016), examined a merge network with up to three unreliable sup-
pliers a distribution center and a shared buffer. The failure and repair times of the
suppliers were assumed to be Coxian-2 distributed. Two algorithms were proposed
that were used as a decision making tool to determine the optimal system’s configu-
ration in order to optimize its performance measures.
Two echelon discrete material supply chains with exponential processing rates at
all nodes were examined by Vidalis et al. (2014, 2015). They used continuous time-
discrete state Markov processes for the performance evaluation of the considered
systems. They proposed the appropriate algorithms to generate the transition matrix
for any values of the system’s parameters in order to estimate the performance meas-
ures of the examined systems.
Diamantidis et al. (2016), analyzed a push pull merge supply chain with two buff-
ers, distribution center and Poisson distributed external demand using a continuous
time, discrete state Markov chain. An algorithm for the performance evaluation of
the considered system was also proposed.
Chen et al. (2014), examined the impact of supply chian power structure on prof-
itability in an assembly supply chain with two suppliers and one assembler. They
investigated two power regimes regarding the relationship between the suppliers and
the assembler.
Modrak and Marton (2013) presented a theoretical framework for modeling of
assembly supply chains and proposed three possible indicators to measure a struc-
tural complexity of assembly supply networks. In this direction, Hamta et al. (2018),

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 706 M. Vidalis et al.

addressed the problem of modeling and measuring the structural complexity of

assembly supply chain networks in order to obtain the optimal supply chain con-
figuration. This was achieved by applying a four step algorithm was proposed that
considered the assembly sequence constraint.
The vast majority of papers in the literature with parallel server workstations,
assume serial flow lines. The typical method to tackle such systems is to replace
the parallel machines by a single one and then apply the appropriate techniques to
analyze the new simpler single server systems. Another method that can be used
without replacements, is Markov analysis. If the system has a few workstations, then
Markov analysis has the advantage—when it can be applied—that it provides accu-
rate numerical results. A major disadvantage of this method is that it can only be
used to solve relatively small systems. This limitation is due to the resulting state
space which becomes enormous when the number of stations and the capacities of
the intermediate buffers increase.
Regarding the replacement techniques, one of the first attempts to study systems
with parallel server workstations was done by Friedman (1965). A method that
transformed a system with parallel-machine workstations into an equivalent system
with less stages was presented. A major assumption was that for any sequence of
arrival times, the flow time was independent of the order of stages. In this direc-
tion, for serial production lines with continuous flow of material, a procedure for
the replacement of each multi server workstation by a single server workstation was
presented by Burman (1995). It was assumed that the equivalent workstation had
a maximum processing rate which was equal to the sum of the processing rates of
the parallel machines. The failure and repair parameters of the equivalent worksta-
tion were calculated by using the assumption that all parallel machines at a specific
workstation operate independently.
Patchong and Willaeys (2001) proposed another technique for the replacement of
each multi server workstation by a single server workstation in serial multi server
workstation production lines. They also presented the necessary sets of equations for
this replacement.
Since the replacement is heuristic-based, and in some cases, quite complicated,
additional errors and computation effort could be introduced. Moreover, it is not
easy to analyze each machine’s role in system performance, which makes it difficult
to study production control and improvement policies.
To reduce such complexities, a direct method (Markov chain analysis) applied
to each parallel server, is introduced in this paper without using replacements tech-
niques. It is expected that this direct approach will provide more accurate results
than the replacement techniques.
In this direction, Dubois and Forestier (1982) and Forestier (1980) modelled sys-
tems using as an evaluation tool Markov Chain analysis. Flow lines where some
workstations have different numbers of parallel machines and unequal service rates
were considered by Iyama and Ito (1987). They examined the effects of the server
allocation on the maximum average production rate by using Markov chain analy-
sis. Lower and upper bounds for finite multi-server exponential tandem queues were
presented by Dijk and Wal (1989). They provided a proof of the bounds and related
monotonicity results which were based on Markov reward theory.

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Analysis of a two echelon supply chain with merging suppliers,… 707

Baumann and Sandmann (2017), examined two station tandem queues with mul-
tiple identical reliable servers at each station. The service times were assumed to
follow phase type distribution. They provided an exact computational analysis of
various steady state performance measures by modelling the tandem queue as a level
dependent quasi birth and death process.
Diamantidis et  al. (2007), analyzed using a discrete state, continuous time
Markov process, small subsystems with two stations and one buffer that were used
later as decomposition blocks for the analysis of large systems.
The performance evaluation of systems with reliable multi server stages and
finite intermediate buffers was presented by Shin and Moon (2014). They examined
two-stage tandem queues with two buffers using the level dependent quasi-birth-
and-death process.
Wu et al. (2014), examined multi server queuing systems, with unreliable serv-
ers. They used quasi birth and death process to model the system. They calculated
approximately the rate matrix and the steady-state stationary distributions were
obtained by a matrix-analytic approach.
Shin and Moon (2017), analyzed first small systems with three multi server work-
stations and two buffers using a continuous time Markov process. Later these sys-
tems were used a decomposition blocks for the analysis of large systems.
The methodology presented in this paper differs significantly from the existing
techniques in the literature because it does not use replacement techniques to replace
the parallel machines at each merging workstation with an equivalent single server
merging workstation. Moreover the considered system assumes parallel servers at
each work station which makes the system more complicated and to our best knowl-
edge such a system has not been examined in the literature so far.
This paper has the following structure: the assumptions of the model and the
solution procedure are given in Sect. 2. Section 3 describes the form of the transition
probabilities matrices and Sect.  4 presents all the necessary steps of the proposed
algorithm. Section  5 presents the mathematical formulas of the examined perfor-
mance measures, while Sect. 6 examines the impact of each system parameter on its
performance measures. Finally Sect. 7 concludes the paper and presents some ideas
for further research.

2 System description and solution procedure

This study examines a push supply chain network managing discrete materials con-
sisting of non identical merging suppliers each one contains reliable parallel supply
channels, an intermediate storage area and a distribution centre (DC) with parallel
identical reliable channels.
The theoretical and practical contribution of this research is that it provides an
analytical tool that can be used for the performance evaluation and optimization of
merge-assembly multi echelon supply chains. In real life, merge-assembly supply
chains are extensively used in manufacturing industries, particularly in the automo-
bile, computer and electronic industries. One of the major challenges at the early
configuration design stage is to make a decision about the most suitable topology

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 708 M. Vidalis et al.

(i.e., number of suppliers, replenishment rate, storage area capacity etc.). The pro-
posed analysis can help the practitioners to make optimal decisions in this direction.
As depicted in Fig. 1, a number of M, (M ≥ 1) non-identical suppliers, send prod-
ucts (of one type) to a storage area with capacity Α that is located immediately
downstream. Each one of the j, j = 1,…,M, non identical merging suppliers may have
a number of identical parallel supply channels Pj (usually called capacity of supplier
j). The total processing rate of the jth supplier, j = 1,…,M is exponentially distrib-
uted and is denoted by μj, j = 1,…,M, respectively.
Let 𝜇i j , i = 1, … , Pj , j = 1, … , M  , denotes the exponentially distributed process-
ing rate of the ith parallel supply channel at the jth supplier. It is straightforward that
∑P1 ∑P2 ∑Pk
𝜇 = 𝜇1 , i=1
i=1 i1
𝜇i2 = 𝜇2 , … , i=1 𝜇iM = 𝜇M . Additionally because all parallel
supply channels Pj at the jth supplier j, j = 1,…,M are identical it holds that
𝜇j
𝜇1 j = 𝜇2 j = ⋯ = 𝜇Pj j = Pj
, j = 1, … , M.
The last equation shows that all the parallel supply channels Pj of the correspond-
ing jth supplier, have the same exponential rate which is equal to Pj , j = 1, … , M  .
𝜇
j
This equality leads to fewer numbers of states of the Markov chain. In that way the
system analysis becomes more manageable.
Because each supplier sends products to the storage area independently of the
other suppliers, the exponential distribution is used to model the processing rate of
each supplier. Moreover the use of the exponential distribution simplifies the exam-
ined complex model and is used often in the literature.
A distribution centre located immediately downstream of the shared storage area,
executes an additional processing on the items stored in the storage area. After this
processing the finished goods move outside the network.
It is also assumed that the suppliers are saturated i.e. there is always material
before the suppliers, and the DC is never blocked i.e. there is always free space area
after the DC in order to place the finished goods.
The distribution centre (DC) has a number of C (C ≥ 1) parallel identical reliable
channels where each one of the C identical parallel channels operates with an expo-
nentially distributed processing rate μ.

Suppliers DC
μ1
P1 μ
Storage area
μ
P2 C
μ2

PM μM

Fig. 1  A supply network with M suppliers, Pj parallel supply channels in each supplier, j = 1,…,M, a
shared storage area and a DC with C identical channels

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Analysis of a two echelon supply chain with merging suppliers,… 709

When one supplier finishes processing a part and the storage area is full, then the
supplier is assumed to be blocked (blocking after service, BAS). Blocking stops if a
part is removed from the storage area because one channel at the DC finishes its ser-
vice. If more than one supplier is blocked, then the supplier with the smallest index
j, j = 1,…,M has the priority over the others to become unblocked first.
The considered system is described by parameters M, Pj, μj (j = 1,…,M), A, μ and
C, where M: number of merging suppliers; Pj: number of parallel supply channels at
the jth supplier; A: capacity of shared storage area (# of spaces); C: capacity of dis-
tribution centre (# of channels); μj: the total processing rate of the jth supplier; μ: the
processing rate of each channel at the DC.
The system depicted in Fig. 1, has significant practical value, since it can be used
to model real supply chain systems with merge operation that can be met in modern
supply chain networks. Moreover this system can be also used as a subsystem of
larger supply chains whenever merge operations occur at a specific point of the sup-
ply chain.
The proposed algorithm can handle theoretically systems (depending on hard-
ware capabilities) with any number of merging suppliers M, any number of parallel
supply channels Pj at each supplier j, any number of capacity of the storage area A
and any number of parallel channels at the DC.
The main goal of this study is the performance analysis of the system depicted in
Fig. 1. Additionally, we examined the influence of all parameters on its performance
measures. This has as a result the determination of the best combination for the sys-
tem parameters that optimize its performance measures. The optimization and the
performance evaluation of a such complicated system like the one depicted in Fig. 1
is the contribution of this paper.

2.1 Solution procedure

The examined model is described by a Markov process with continuous time and
discrete states. The form of the transition probabilities matrix which describes the
transitions among the states of the system, is affected by all the system parameters.
The system depicted in Fig.  1, is modeled as a birth–death stochastic process.
Births model the entry to the storage area and the DC and deaths model the exit from
the DC. As a result of this, the matrix of the transition probabilities is composed of
three different sets of matrix-blocks: (a) a set of nearly replica matrix-blocks in the
diagonal, denoted by ΜDi, (b) a set of nearly replica matrix-blocks above the diago-
nal, denoted by ADi, and (c) a set nearly replica of matrix-blocks under the diagonal,
denoted by UDi. So, the structure of the matrix of the transition probabilities has
a complete repetitive pattern. This repetition gives the opportunity to determine a
recursive generation for the matrix of the transition probabilities given any system
parameters. As a result, we can find the full set of the linear flow balance equa-
tions, then all the stationary probabilities, and finally all the system’s performance
measures.
A brief description of the steps for the performance evaluation of the examined
system is given below:

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 710 M. Vidalis et al.

Successive processes of the algorithm that gives the performance measures

Process 1: Calculation of the transition matrix dimension concerning all the

parameters of the system, i.e. number of suppliers M, number of
parallel supply channels in each supplier (Pj), storage area capac-
ity A and DC capacity C.
Process 2: Generation of the matrix of the transition probabilities:
 Generation of the matrix-block MD0.
 Generation of the matrix-blocks MD1, MD2,…,MDM (given
MD0).
 Generation of the matrix-blocks UD1, UD2,…,UDM.
 Generation of the matrix-blocks AD0, AD1,…,ADM.
Process 3: Calculation of the steady-state probability vector and of the exam-
ined measures of performance.

3 Form of the matrix of the transition probabilities

The form of the matrix of the transition probabilities is affected by all four sys-
tem parameters. In order to find the steps that reveal the form of the final matrix
of the transition probabilities, initially the form of the matrix of the transition
probabilities when each one parameter changes at a time is explored. Finally, the
effect of all system parameters is combined by composing all the transition matri-
ces simultaneously in order to create the complex final matrix of the transition
probabilities.
Before we proceed to the description of the transition matrix it is useful to
make a reference to the simplest system that comes from the easiest combina-
tion of the four parameters, which is also the “first stone” for the entire matrix of
the transition probabilities. This system consists of one supplier (M = 1) with the
smallest number of supply channel (P1 = 1), no storage area capacity (A = 0) and a
single channel in the DC (C = 1). Generally, the number of states of a system with
M suppliers, P1, P2,…, PM, parallel supply channels at each supplier, A spaces
in storage area and C identical channels at the distribution centre is denoted by
SM(P1 ,P2 ,…,PM ),A,C . The number of states for the system (M = 1, P1 = 1, A = 0, C = 1),
i.e. the S1(1),0,1 is 3. Each state denotes the number of material units that being
served or waiting for service to the corresponding echelon/stage of the current
network.
In the above case there are two states for the supplier, i.e. the supplier is func-
tional (1), or blocked (b), and two states for the DC, i.e., idle (0) or functional (1).
When the supplier is in state block due to functional state of the DC, the material
unit belongs to the DC and not to the supplier. This state is denoted as b2.
So, the states of the system (1(1),0,1) are:

10: Supplier (busy) and DC (idle),

11: Supplier (busy) and DC (busy),
b2: Supplier (blocked) and DC (busy).

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Analysis of a two echelon supply chain with merging suppliers,… 711

The matrix of the transition probabilities for the above system (1(1),0,1) is called
the fundamental matrix and has the following form (as shown in Table 1).
From the above description the matrix of the transition probabilities (MΤP) of the
system (1(1),0,1) can be presented in the following form:
[ ]
MD1(1),0,1
0
AD1(1),0,1
0
MTP(1(1), 0, 1) = .
UD1(1),0,1
1
MD 1(1),0,1
1

3.1 The impact of the storage area capacity (A) on the form of the transition

probabilities matrix

The parameter that is altered is the storage area capacity A = 0,1,2,3,…, while all
the rest parameters remain unchanged, i.e. M = 1 (supplier), P1 = 1 (parallel supply
channels in this supplier) and C = 1 channel at the DC. The matrix of the transition
probabilities for the system (1(1),1,1) has the following form presented in Table 2.

S1(1),1,1 = S1(1),0,1 + 1 = 3 + 1 = 4
while the system (1(1),A,1) has the form presented in Table 3.
So, the matrix of the transition probabilities of the examined system (1(1),A,1)
has the synoptic form:
[ ]
MD01(1),A,1 AD1(1),0,1
0
MTP(1(1), A, 1) = .
UD11(1),0,1 MD1(1),0,1
1

Summarizing, when the storage area capacity A increases, only the diagonal sub
matrix MD1(1),A,1
0
is affected. Specifically, as the storage area capacity increases, the
dimension of MD1(1),A,1
0
increases in exactly the same way. For the 1st additional

Table 1  Matrix of the transition probabilities of system (1(1),0,1)

Table 2  Matrix of the transition probabilities of system (1(1),1,1)

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 712 M. Vidalis et al.

Table 3  Matrix of the transition probabilities of system (1(1),A,1)

1(1),A,1
⎛ S
⏞⏞⏞ ⎞
−4+(1−1)
⎜ ⎟
space the row ⎜𝜇, −𝜇1 − 𝜇, 𝜇1 , 0, … , 0 ⎟ is added, for the 2nd additional space
⎜ ⎟
⎝ ⎠
1(1),A,1
⎛⏞⏞
2−1
⏞
S
⏞⏞⏞ ⎞
−4+(2−1)
⎜ ⎟
the row ⎜ 0 , 𝜇, −𝜇1 − 𝜇, 𝜇1 , 0, … , 0 ⎟ is added,…, for the ith additional
⎜ ⎟
⎝ ⎠
1(1),A,1
⎛⏞⏞ i−1
⏞
S
⏞⏞⏞ ⎞
−4+(i−1)
⎜ ⎟
space the row with elements ⎜0, … , 0, 𝜇, −𝜇1 − 𝜇, 𝜇1 , 0, … , 0 ⎟ is added. The
⎜ ⎟
⎝ ⎠
rest sub matrices MD1(1),A,1
1
 , AD1(1),A,1
0
and UD1(1),A,1
1
remain unchanged.
So, the dimension of the matrix of the transition probabilities or equivalently the
total number of states is given by the following relationship:

S1(1),A,1 = S1(1),0,1 + A

S1(1),A,1 = 3 + A
Inductive conclusion that results from the analysis above:

MTP(1(1),1,1) is based on MTP(1(1),0,1), MTP(1(1),2,1) is based on

MTP(1(1),1,1),…,MTP(1(1),A,1) is based on MTP(1(1),A − 1,1). So,
MTP(1(1),A,1) is dependent on MTP(1(1),0,1).

3.2 The impact of the DC capacity (C) on the form of the transition probabilities

matrix

The parameter that is altered now is the capacity of the DC, C = 1,2,3,…, (channels)
while the rest parameters remain unchanged, i.e. M = 1 (suppliers), P1 = 1 (parallel
supply channels in this supplier) and A = 0.

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Analysis of a two echelon supply chain with merging suppliers,… 713

Table 4  Matrix of the transition probabilities of the system (1(1),0,2)

Table 5  Matrix of the transition probabilities of the system (1(1),0,C)

The matrix of the transition probabilities for system (1(1),0,2) has the form
presented in Table  4, while the structure of the system (1(1),0,C) is presented in
Table 5.
The synoptic form of the system (1(1),0,C) is given by:
[ ]
MD01(1),A,1 AD1(1),0,1
0
MTP(1(1), A, 1) = .
C ∗ UD11(1),0,1 −C ∗ MD11(1),0,1

Consequently, the DC capacity C seems to affect mostly the diagonal sub matrix
MD1(1),0,1
0
 . The dimension of MD1(1),0,C
0
increases correspondingly with the increas-
ing number of channels C, and especially in the same way. Any time we add a
new channel the MD1(1),0,C−1
0
increasing by one row and one column. Specifically,
the elements − μ1 and μ1 are inserted in the most upper cells i.e. (1,1) and (1,2)
and the element μ is inserted in cell (2,1). Finally, the synoptic form of the system
MTP(1(1),0,C − 1) gives the rest transition matrix for the examined case of capacity
C realizing two transitions: the symbols, − μ, and μ is added in all diagonal and sub-
diagonal cell values of MTP(1(1),0,C − 1) respectively.
So, as we can see from the finally synoptic form above the matrix-block AD1(1),0,C
0
remains unaltered compared with the matrix-block AD1(1),0,1
0
of the simplest system,
while the matrix-blocks UD1(1),0,C
1
and MD1(1),0,C
1
is almost the same with those of
the simplest system with the only difference that any element has multiplied with C.
The relationship that generates the dimension of the matrix of the transition prob-
abilities or equivalently the number of states is given below:

S1(1),0,C = S1(1),0,C−1 + 1, C = 1, 2, 3, … ,

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 714 M. Vidalis et al.

Table 6  Matrix of the transition probabilities of the system (1(2),0,1)

Table 7  Matrix of the transition probabilities of system (1(P1),0,1)

S1(1),0,C = S1(1),0,1 + (C − 1) = 3 + C − 1 = C + 2, C = 1, 2, 3, … ,
The inductive conclusion that comes out from the above analysis is:

MTP(1(1),0,2) is based on MTP(1(1),0,1), MTP(1(1),0,3) is based on

MTP(1(1),0,2),…, MTP(1(1),0,C) is based on MTP(1(1),0,C − 1). So,
MTP(1(1),0,C) is based on the fundamental matrix MTP(1(1),0,1).

3.3 The impact of the capacity (number of parallel supply channels P1)

on the form of the transition probabilities matrix

This time the number of parallel supply channels P1 = 2,3,4,…, of the supplier is
altered, while all the other parameters remain unchanged, i.e. M = 1, A = 0 and C = 1.
Table 6 presents the structure of the matrix of the transition probabilities for system
(1(2),0,1):

Number of states: S1(2),1,1 = S1(1),0,1 + 1 = 3 + 1 = 4

For a system with P1 parallel supply channels (1(P1),0,1) the corresponding transi-
tion matrix has the form presented Tables 6, 7.
So, the synoptic form for the above matrix of the transition probabilities is the
following:
[ 1(P ),0,1
]
MD0 1 AD1(1),0,1
0
MTP(1(P1 ), 0, 1) = .
UD1(1),0,1
1
MD 1(1),0,1
1

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Analysis of a two echelon supply chain with merging suppliers,… 715

As we can see from the above Tables when the capacity of the supplier is
increased the matrix of the transition probabilities MTP(1(P1),0,1) can be defined
from two structural procedures. The first one is that the matrix-block MD0 1
1(P ),0,1

comes from the transition matrix MTP(1(P1 − 1),0,1) by adding − μ1 to all diago-
nal elements and μ1 to all hyper-diagonal elements and the second is that just
after the matrix-block MD0 1 we add one column with element 𝜇1 (at the end
1(P ),0,1

of that column) and then one row with elements 𝜇 and −𝜇 (at the last two columns
of that row). We must mention here (this note will be used for the analysis below)
that if we have C capacity to the DC, the elements of the new row will be C ∗ 𝜇
and C ∗ (−𝜇) . The relationship that gives the number of states is the following:

S1(2),1,1 = S1(1),0,1 + (P1 − 1) = 3 + (P1 − 1)

The above analysis results to the following inductive conclusion:

MTP(1(2),0,1) is based on MTP(1(1),0,1) and MTP(1(3),0,1) is based on

MTP(1(2),0,1),…, MTP(1(P1),0,1) is based on MTP(1(P1 − 1),0,1). So,
MTP(1(P1),0,1) is based on the fundamental matrix MTP(1(1),0,1).

3.4 The impact of the number of suppliers (M) on the transition probabilities

matrix (Pj = 1, A = 0, C = 1)

In this case the number of suppliers (M) changes, while all the other parameters
remain stable. Initially, we examine the case with two suppliers that supply the
distribution center.
The possible states of that model are the following:

110: Supplier 1 (busy), Supplier 2 (busy), and DC (idle),

111: Supplier 1 (busy), Supplier 2 (busy), and DC (busy),
1b2: Supplier 1 (busy), Supplier 2 (blocked), and DC (busy),
b12: Supplier 1 (blocked), Supplier 2 (busy), and DC (busy),
bb3: Supplier 1 (blocked), Supplier 2 (blocked), and DC (busy).

Therefore the structure of the matrix of the transition probabilities for system

MTP(2(1,1),0,1) has the form presented in Table 8.

Table 8  Matrix of the transition probabilities of system (2(1,1),0,1)

13
 716 M. Vidalis et al.

Table 9  Matrix of the transition probabilities of the system (3(1,1,1),0,1)

Table 10  Matrix of the transition probabilities of the system (3(2,3,4),1,2) in synoptic form

From the above presentation the specific transition matrix can be represented as
follows:
[ ]
MD2(1,1),0,1
0
AD2(1,1),0,1
0
MTP(2(1, 1), 0, 1) = .
UD2(1,1),0,1
1
MD2(1,1),0,1
1

The number of states of that transition matrix are

S2(1,1),0,1 = 2 ⋅ S1(1),0,1 − 1 = 2 ⋅ 3 − 1 = 5.
In order to better explain the iteration that relates the transition matrixes with suc-
cessively ongoing number of suppliers (M), we present the next more complex sys-
tem (3(1,1,1),0,1). In this case, three suppliers supply the distribution centre (each
one of them has a single supply channel) the capacity of the shared storage area is 0
and the number of channels at the DC is one. The transition matrix of that system is
presented in Table 9.
Briefly, in Table form
[ ]
MD3(1,1,1),0,1
0
AD3(1,1,1),0,1
0
MTP(3(1, 1, 1), 0, 1) = .
UD3(1,1,1),0,1
1
MD3(1,1,1),0,1
1

Therefore, according to Tables  10 and 11 we can derive a general formulation

which contains two basic verifications. Firstly, the relationship that gives the dimen-
sion of the matrix of the transition probabilities or the number of states is:

13
Analysis of a two echelon supply chain with merging suppliers,… 717

Table 11  Matrix of the transition probabilities of the system (1(1),1,2)

⎛ ⎞ ⎛ ⎞
⎜ ⎟ ⎜ ⎟
⎜
M 1, 1, … , 1⎟,0,1 ⎜
M−1 1, 1, … , 1⎟,0,1
⎜⏟⏞⏞⏟⏞⏞⏟⎟ ⎜⏟⏞⏞⏟⏞⏞⏟⎟
⎜ ⎟ ⎜ ⎟
S ⎝ M ⎠ =2⋅ S ⎝ M−1 ⎠ − 1, M = 2, 3, … ,
with primal term S 1(1),0,1
= 3 (recursive relationship of first order), or simply,
⎛ ⎞
⎜ ⎟
⎜
M 1, 1, … , 1⎟,0,1
⎜⏟⏞⏞⏟⏞⏞⏟⎟
⎜ ⎟
S ⎝ M ⎠ = 2M + 1, M = 2, 3, … ,
Secondly, the structure of the transition matrix can be summarized to the fol-
lowing four steps:
⎛ ⎞
⎜ ⎟
M ⎜1, 1, … , 1⎟,0,1
⎜⏟⏞⏞⏟⏞⏞⏟⎟ ⎛ ⎛ ⎞ ⎞
⎜ ⎟ ⎜ ⎜ ⎟ ⎟
⎝ ⎠
1. MD0 M
is a replica of MTP⎜M − 1⎜1, 1, … , 1⎟, 0, 1⎟ with three mod-
⎜ ⎜⏟⏞⏞⏟⏞⏞⏟ ⎟ ⎟
⎝ ⎝ M−1 ⎠ ⎠
ifications:
• μi has been replaced by μi+1 i = 1,2,…,M − 1, i.e. 𝜇i → 𝜇i+1
• −𝜇1 has been included to all diagonal cell values (in case there are P1 num-
ber of parallel supply channels
( )to the first supplier, it’s obvious that −𝜇1
will be substituted by P1 ∗ −𝜇1 ).
• 𝜇1 has been added to cell (1,2) (in case there are P1 number of parallel sup-
ply channels to the first supplier, 𝜇1 will be obviously substituted by P1 ∗ 𝜇1
and specifically, as we will show below, this will happen from cells (1,2),
(2,3), to cell (A + C,A + C + 1)).
⎛ ⎞ ⎛ ⎞
⎜ ⎟ ⎜ ⎟
M ⎜1, 1, … , 1⎟,0,1 M ⎜1, 1, … , 1⎟,0,1
⎜⏟⏞⏞⏟⏞⏞⏟⎟ ⎜⏟⏞⏞⏟⏞⏞⏟⎟
⎜ ⎟ ⎜ ⎟
⎝ ⎠ ⎝ ⎠
2. MD1 M
is a decreased reprint of MD0 M
with also three
⎛ ⎞
⎜ ⎟
M ⎜1, 1, … , 1⎟,0,1
⎜⏟⏞⏞⏟⏞⏞⏟⎟
⎜ ⎟
⎝ ⎠
modifications (the times that MD0 M
will
be repeated depends on the
number of parallel supply channels P1 , where in our case is one):

13
 718 M. Vidalis et al.

• The first column and row, have disappeared.

• −μ1 has disappeared from all diagonal elements (in case we have P1 > 1 ,
⎛ ⎞
⎜ ⎟
M ⎜1, 1, … , 1⎟,0,1
⎜⏟⏞⏞⏟⏞⏞⏟⎟
⎜ ⎟
⎝ ⎠
each time we create a matrix MD1 M
we will subtract an addi-
tional one −μ1).
⎛ ⎞
⎜ ⎟
M ⎜1, 1, … , 1⎟,0,1
⎜⏟⏞⏞⏟⏞⏞⏟⎟
⎜ ⎟
⎝ ⎠
• All the sub-diagonal elements, i.e. μ, of MD0 M
have disap-
peared.
⎛ ⎞ ⎛ ⎞
⎜ ⎟ ⎜ ⎟
M ⎜1, 1, … , 1⎟,0,1 M−1⎜1, 1, … , 1⎟,0,1
⎜⏟⏞⏞⏟⏞⏞⏟⎟ ⎜⏟⏞⏞⏟⏞⏞⏟⎟
⎜ ⎟ ⎜ ⎟
⎝ ⎠ ⎝ ⎠
3. AD0 M
is
an augmented replica of AD0 M−1
(or
in general
is a square matrix with all diagonal elements equal to 1 ∗ 𝜇1 since P1 = 1).
⎛ ⎞ ⎛ ⎞
⎜ ⎟ ⎜ ⎟
M 1, 1, … , 1⎟,0,1
⎜ ⎜
M−1 1, 1, … , 1⎟,0,1
⎜⏟⏞⏞⏟⏞⏞⏟⎟ ⎜⏟⏞⏞⏟⏞⏞⏟⎟
⎜ ⎟ ⎜ ⎟
⎝ ⎠ ⎝ ⎠
4. UD1 M
is an augmented replica of UD1 M−1
(or in general

is a square matrix with all diagonal elements equal to 1 ∗ 𝜇 since C = 1).

⎛ ⎛ ⎞ ⎞
⎜ ⎜ ⎟ ⎟
The above analysis specifies that MTP⎜M ⎜1, 1, 1, … , 1⎟, 0, 1⎟ is based on
⎜ ⎜⏟⏞⏞⏞⏞⏟⏞⏞⏞⏞⏟⎟ ⎟
⎝ ⎝ M ⎠ ⎠
⎛ ⎛ ⎞ ⎞ ⎛ ⎛ ⎞ ⎞
⎜ ⎜ ⎟ ⎟ ⎜ ⎜ ⎟ ⎟
MTP⎜M − 1⎜1, 1, 1, … , 1⎟, 0, 1⎟ , and MTP⎜M − 1⎜1, 1, 1, … , 1⎟, 0, 1⎟ is based on
⎜ ⎜⏟⏞⏞⏞⏞⏟⏞⏞⏞⏞⏟⎟ ⎟ ⎜ ⎜⏟⏞⏞⏞⏞⏟⏞⏞⏞⏞⏟⎟ ⎟
⎝ ⎝ M−1 ⎠ ⎠ ⎝ ⎝ M−1 ⎠ ⎠
⎛ ⎛ ⎞ ⎞ ⎛ ⎛ ⎞ ⎞
⎜ ⎜ ⎟ ⎟ ⎜ ⎜ ⎟ ⎟
MTP⎜M − 2⎜1, 1, 1, … , 1⎟, 0, 1⎟ and so on. Consequently, MTP⎜M ⎜1, 1, 1, … , 1⎟, 0, 1⎟
⎜ ⎜⏟⏞⏞⏞⏞⏟⏞⏞⏞⏞⏟ ⎟ ⎟ ⎜ ⎜ ⏟⏞⏞⏞⏞⏟⏞⏞⏞⏞⏟ ⎟ ⎟
⎝ ⎝ M−2 ⎠ ⎠ ⎝ ⎝ M ⎠ ⎠
is based on MTP(1(1), 0, 1).
In all the above procedure, the impact of each parameter A, C, Pj j = 1,…, M, and
M in isolation has been examined. The jointed impact of all parameters is examined
below.

13
Analysis of a two echelon supply chain with merging suppliers,… 719

3.5 The combined impact of capacity A on storage area, of C on DC, of capacity

of each one supplier M ( Pj ), j = 1,…, M, and of M suppliers

In this section the way that the transition matrix is generated when all the system
parameters A, C, Pj , and M, change at the same time is described. The procedure
uses as a seed the fundamental matrix (i.e. the transition matrix of the simplest
model (1(1),0,1)) described in Sect.  3. In order to illustrate the generation of the
matrix of the transition probabilities an example is used. More specifically it is
shown how the matrix of the transition probabilities of the system (3(2,3,4),1,2) can
be generated using only as a basis the matrix of the transition probabilities of system
(1(1),0,1)). The matrix of the transition probabilities of system (3(2,3,4),1,2), due to
his huge dimension, 63 × 63, is presented in a compact form (see Table 10), which
has been introduced in the previous sections. The complete matrix of the transition
probabilities in an analytical form is given in “Appendices A and B”.
The generation of the matrix of the transition probabilities can be done only
when the following sequence A → C → Pj → M of the considered parame-
ters is applied. Therefore firstly (according to the characteristics of the system
(3(2,3,4),1,2)), the storage area capacity is considered, and in comparison with
the fundamental matrix A has been increased from zero to one ( A = 1 ). Since
the storage area capacity has been changed the procedure described in Sect. 3.1
can be applied in order to get the matrix of the transition probabilities presented
in Table  5 which corresponds to system (1(1),1,1). Starting now from system
(1(1),1,1) the DC capacity is increased by one (i.e. C = 2 ). Applying the meth-
odology that was presented in Sect. 3.2, the matrix of the transition probabilities
presented in Table 11 is obtained which corresponds to system (1(1),1,2).
Using now system (1(1),1,2) as a starting point and considering the target sys-
tem (3(2,3,4),1,2)), the procedure takes into account the number of parallel sup-
ply channels of the supplier with the largest index (i.e., the third supplier which
has four parallel supply channels) and continuous examining suppliers in decreas-
ing order of their index. Therefore, the system that needs to be examined is the
system (1(4),1,2). Applying the procedure described in paragraph 3.3 the matrix
of the transition probabilities presented in Table 12 is obtained.
Starting now from system (1(4),1,2) the next step is to generate the matrix of
the transition probabilities of the system (2(3,4),1,2) (see “Appendix B”), adding

Table 12  Matrix of the transition probabilities of the system (1(4),1,2)

13
 720 M. Vidalis et al.

the second supplier with capacity 3. The applied steps are the same with the ones
described in Sect.  3.4 with a slight modification. In particular, step 1 is exactly
the same, while in step 2 except from the row and column that should be removed
it is necessary to remove the rows and columns that correspond to the capacity
A of the storage area, and capacity C at the DC, namely three rows and columns.
Furthermore, step 2 should be implemented P1 times and each time one more 𝜇1
should be removed from all diagonal elements (totally at the last implementa-
tion P1 elements should be removed). As long as step 2 is performed, steps 3
and 4 should be implemented simultaneously. Step 4 remains the same, creating
a square matrix with all the diagonal elements equal to 2 ∗ 𝜇 (since C = 2 ), with
dimension similar to the matrix-block that is created from step 2, while in step 3 a
square matrix with all diagonal elements equal to 3 ∗ 𝜇1 (since P1 = 3 ) is created.
For each sequential application of step 2 𝜇1 should be subtracted from all diago-
nal elements of the matrix created by step 3.
Finally, the matrix of the transition probabilities of the system (2(3,4),1,2) can
be used in order to create the matrix of the transition probabilities of the system
(3(2,3,4),1,2) by adding one supplier at the beginning with capacity 2 and apply-
ing the steps that described in Sect.  3.4 with the modifications that were men-
tioned before.
Generally, the matrix of the transition probabilities of any system can be created
by changing one parameter at a time starting with A and ending with M following
the sequence A → C → Pj → M  , using the corresponding methodology exactly with
the same manner for all parameters except M where there are slight modifications
that are compatible with the common sense. Therefore if the matrix of the transition
probabilities of the system (4(3,2,5,7),3,4) needs to be created the following matri-
ces of the transition probabilities of the corresponding systems should be created
using the sequence that is presented below:
(1(1), 0, 1) → (1(1), 3, 1) → (1(1), 3, 4) → (1(7), 3, 4)
→ (2(5, 7), 3, 4) → (3(2, 5, 7), 3, 4) → (4(3, 2, 5, 7), 3, 4)

4 The algorithm

13
Analysis of a two echelon supply chain with merging suppliers,… 721

5 Performance measures

Using the steady-state probabilities calculated from the above procedures we can
estimate all the performance measures of any examined system. The performance
measures, which are more important, are the average invetory in the DC ­(WIPDC),
the average invetory of the system ­(WIPsystem), and the throughput or the mean out-
put rate of the system (THR).
The first performance measure can be defined as:
WIPDC = Mean number of Blocked Parallel Supply channels
+ Mean number of busy channels in DC + Mean Storage area Level

Mathematically it can be defined as the internal product of two vectors:

WIPDC = 𝐳 ⋅ 𝛑

where z is the vector denoting the number of entities, 0  ≤ number of enti-

ties ≤ P1 + P2 + ⋯ + PM + A + C for the jth position of the stationary probability
vector π, j = 1,2,…, SM(P1 ,P2 ,…,PM ),A,C

⎡ 𝜋11 … 1 11 … 1,…,11 … 1 0 , 𝜋11 … 1 11 … 1,…,11 … 1 1 , 𝜋11 … 1 11 … 1,…,11 … 1 2 , … , ⎤

⎢ ⏟⏟⏟ ⏟⏟⏟ ⏟⏟⏟ ⏟⏟⏟ ⏟⏟⏟ ⏟⏟⏟ ⏟⏟⏟ ⏟⏟⏟ ⏟⏟⏟ ⎥
⎢ P1 P2 PM P1 P2 PM P1 P2 PM ⎥
⎢𝜋 , 𝜋 , 𝜋 , … , ⎥
⎢ 11 … 1 11 … 1,…,11 … 1 (C+A) 11 … 1 11 … 1,…,11 … b (C+A) 11 … 1 11 … 1,…,11 … bb (C+A) ⎥
⎢ ⏟⏟ ⏟ ⏟⏟ ⏟ ⏟⏟ ⏟ ⏟ ⏟ ⏟ ⏟⏟ ⏟ ⏟ ⏟ ⏟ ⏟ ⏟ ⏟ ⏟ ⏟ ⏟ ⏟⏞⏟ ⏞
⏟ ⎥
⎢ P1 P2 PM P1 P2 PM P1 P2 PM
⎥
⎢ 𝜋11 … 1 11 … 1,…,bb … bb (C+A) , 𝜋11 … 1,…,11 … b 11 … 1 (C+A) , 𝜋11 … 1,…,11 … b 11 … b (C+A) , … , ⎥
𝜋 = ⎢ ⏟⏟⏟ ⏟⏟⏟ ⏟⏞⏟⏞⏟ ⏟⏟⏟ ⏟⏟⏟ ⏟⏟⏟ ⏟⏟⏟ ⏟⏟⏟ ⏟⏟⏟ ⎥
⎢ P1 P2 PM P1 PM−1 PM P1 PM−1 PM ⎥
⎢𝜋 , 𝜋 , 𝜋 , … , ⎥
⎢ 11 … 1 ,…, 11 … b bb … b (C+A) 11 … 1 ,…, 11 … bb 11 … 1 (C+A) 11 … 1 ,…,11 … bb 11 … b (C+A) ⎥
⎢ ⏟⏟ ⏟ ⏟⏟⏟ ⏟⏟⏟ ⏟⏟⏟ ⏟⏞⏟⏞⏟ ⏟⏟⏟ ⏟⏟⏟ ⏟⏞⏟⏞⏟ ⏟⏟⏟ ⎥
⎢ P1 PM−1 PM P1 PM−1 PM P1 PM−1 PM
⎥
⎢ 𝜋11 … 1,…,11 … bb bb … b (C+A) , … , 𝜋bb … b,…,bb … bb bb … b (C+A) ⎥
⎢ ⏟⏟⏟ ⏟⏞⏟⏞⏟ ⏟⏟⏟ ⏟⏟⏟ ⏟⏞⏟⏞⏟ ⏟⏟⏟ ⎥
⎣ P1 PM−1 PM P1 PM−1 PM ⎦
∑(C+A) ∑P1 ∑P2 ∑PM
So, WIPDC = k=0
k ∗ 𝜋11…1k + i=0 j=0
⋯ n=0
((i + j + ⋯ + n + C + A) ∗
⎞
⎟
 , for i + j + ⋯ + n > 0.
11 … biTimes 11 … bjTimes ,…,11 … bnTimes (C+A) ⎟
𝜋
⏟⏞⏞⏞⏞⏟⏞⏞⏞⏞⏟ ⏟⏞⏞⏞⏞⏟⏞⏞⏞⏞⏟ ⏟⏞⏞⏞⏞⏟⏞⏞⏞⏞⏟ ⎟
P1 P2 PM ⎠
The second performance measure W ­ IPsystem can be described as:

13
 722 M. Vidalis et al.

WIPsystem = Number of parallel supply channels Sj in each supplier

+ Mean number of busy channels in DC + Mean Storage area Level.

Mathematically it can be defined as:

WIPsystem = z · π where vectors z, π have the following form:

⎡ P1 + P2 + ⋯ + PM , P1 + P2 + ⋯ + PM + 1, P1 + P2 + ⋯ + PM + 2, … , ⎤
⎢ (P1 +2P2 +3P3 +⋯+MPM )times ⎥
z=⎢ ⏞⏞⏞⏞⏞⏞⏞⏞⏞⏞⏞⏞⏞⏞⏞⏞⏞⏞⏞⏞⏞⏞⏞⏞⏞⏞⏞⏞⏞⏞⏞⏞⏞⏞⏞⏞⏞⏞⏞ ⎥
⎢ P + P + ⋯ + P + C + A, P + P + ⋯ + P + C + A ⎥
⎣ 1 2 M 1 2 M ⎦

⎡ 𝜋11 … 1 11 … 1,…,11 … 1 0 , 𝜋11 … 1 11 … 1,…,11 … 1 1 , 𝜋11 … 1 11 … 1,…,11 … 1 2 , … , ⎤

⎢ ⏟⏟⏟ ⏟⏟⏟ ⏟⏟⏟ ⏟⏟⏟ ⏟⏟⏟ ⏟⏟⏟ ⏟⏟⏟ ⏟⏟⏟ ⏟⏟⏟ ⎥
⎢ P1 P2 PM P1 P2 PM P1 P2 PM ⎥
⎢𝜋 ⎥
⎢ 11 … 1 11 … 1,…,11 … 1 (C+A) , 𝜋11 … 1 11 … 1,…,11 … b (C+A) , 𝜋11 … 1 11 … 1,…,11 … bb (C+A) , … , ⎥
⎢ ⏟⏟ ⏟ ⏟⏟⏟ ⏟⏟⏟ ⏟⏟⏟ ⏟⏟⏟ ⏟⏟⏟ ⏟⏟⏟ ⏟⏟⏟ ⏟⏞⏟⏞⏟ ⎥
⎢ P1 P2 PM P1 P2 PM P1 P2 PM
⎥
⎢ 𝜋11 … 1 11 … 1,…,bb … bb (C+A) , 𝜋11 … 1,…,11 … b 11 … 1 (C+A) , 𝜋11 … 1,…,11 … b 11 … b (C+A) , … , ⎥
𝜋 = ⎢ ⏟⏟⏟ ⏟⏟⏟ ⏟⏞⏟⏞⏟ ⏟⏟⏟ ⏟⏟⏟ ⏟⏟⏟ ⏟⏟⏟ ⏟⏟⏟ ⏟⏟⏟ ⎥
⎢ P1 P2 PM P1 PM−1 PM P1 PM−1 PM ⎥
⎢𝜋 ⎥
⎢ 11 … 1,…,11 … b bb … b (C+A) , 𝜋11 … 1,…,11 … bb 11 … 1 (C+A) , 𝜋11 … 1,…,11 … bb 11 … b (C+A) , … , ⎥
⎢ ⏟⏟ ⏟ ⏟ ⏟ ⏟ ⏟⏟ ⏟ ⏟ ⏟ ⏟ ⏟⏞ ⏟ ⏞
⏟ ⏟⏟ ⏟ ⏟⏟ ⏟ ⏟⏞ ⏟ ⏞
⏟ ⏟⏟ ⏟ ⎥
⎢ P1 PM−1 PM P1 PM−1 PM P1 PM−1 PM
⎥
⎢ 𝜋11 … 1,…,11 … bb bb … b (C+A) , … , 𝜋bb … b,…,bb … bb bb … b (C+A) ⎥
⎢ ⏟⏟⏟ ⏟⏞⏟⏞⏟ ⏟⏟⏟ ⏟⏟⏟ ⏟⏞⏟⏞⏟ ⏟⏟⏟ ⎥
⎣ P1 PM−1 PM P1 PM−1 PM ⎦

where the last element of the vector z denotes the times that we have in total
P1 + P2 + ⋯ + PM + A + C components in the system regarding only the cases
where we have one or more blocked parallel supply channels.
�
P1 +P2 +⋯+PM +C+A
WIPsystem = k ∗ 𝜋11 … 1 11 … 1,…,11 … 1 (k−(P1 +P2 +⋯+PM ))
k=P1 +P2 +⋯+PM ��� ��� ���
P1 P2 PM

� �
+ P1 + P2 + ⋯ + PM + C + A
⎛ ⎞
⎜ ⎟
⎜ ⎛ ⎞⎟
⎜ ⎜ ⎟⎟⎟
⎜ ⎜ ⎟⎟
⎜� P1 �P2 �P M
⎜ ⎟⎟
∗⎜ ⋯ ⎜ 𝜋 ⎟⎟, for i + j + ⋯ + n > 0.
⎜ i=0 j=0 n=0 ⎜ nTimes
��� ⎟⎟
⎜ ⎜ 11 … b
⎜
iTimes
11 … b jTimes
,…,11 … b (C+A) ⎟⎟
⎜ ⎜ ����� � ����� �����
� ����
� ������ � ������ ⎟⎟
⎝ ⎠
⎜��������������������������������������������������������������������������������������������������� ⎟
P1 P2 PM

⎜ ⎟
⎝ (P1 +2P2 +3P3 +⋯+MPM )probabilities ⎠

The third performance measure i.e. the mean output rate or the throughput is
given by the following relationship:
THR = μ · Pr[DC is busy]. The analytical form of the throughput is

13
Analysis of a two echelon supply chain with merging suppliers,… 723

⎛ ⎞
�
C−1
⎜ ⎟
THR = j ∗ 𝜇 ∗ ⎜𝜋11 … 1 11 … 1,…,11 … 1 j ⎟
j=1 ⎜ ⏟⏟⏟ ⏟⏟⏟ ⏟⏟⏟ ⎟
⎝ P1 P2 PM ⎠
⎛ ⎛ ⎞⎞
⎜ ⎜ �
C−1
⎟⎟
+⎜(C ∗ 𝜇) ∗ ⎜1 − 𝜋11 … 1 11 … 1,…,11 … 1 j ⎟⎟
⎜ ⎜ j=1 ⏟⏟⏟ ⏟⏟⏟ ⏟⏟⏟ ⎟⎟
⎝ ⎝ P1 P2 PM ⎠⎠

In order to validate the proposed method, the results of analytical model were com-
pared against those obtained from simulation. For this reason the considered model
was simulated in Arena.
The simulation runs used one replication of 250 million time units and 95% con-
fidence intervals for all performance measures with half-width values of less than
0.07% of their respective estimated values. The numerical results showed a very
good agreement with simulation. The percentage error comparing with simulation
for all cases lies between − 0.14 and 0.09%.

6 Impact of the system parameters on the performance measures

Additionally to the existing numerical results presented in the previous section that
showed a very good agreement between the proposed algorithm and simulation,
this section explores the effect of the system variables on the system’s performance
measures.
The proposed model is used to investigate the effect of each parameter M, Pj , 𝜇j ,
C, μ, and A on the performance measures of the system. Any system performance
measure can be evaluated using the above algorithm. Despite this, due to space limi-
tations numerical results only for some of the above measures such as throughput
and ­WIPsystem are presented in this section. The considered system is examined under
two different cases. The first case considers balanced systems, i.e. systems where the
potential total inbound rate to the storage area equals the total outbound rate, namely
∑M
P ⋅ 𝜇j = C ⋅ 𝜇 = 1 . The second case considers constrained systems, i.e. sys-
j=1 j
tems where the mean processing rate for all merging suppliers is less than the mean
∑M
processing rate for all machines at the DC, namely j=1 Pj ∗ 𝜇j = 1 < C ∗ 𝜇 = 2.
For each one of the above cases three different scenarios are associated. The first
“homogeneous” scenario included systems where each one of the M merging sup-
pliers has the same rate, μi = 1/M, i = 1,2,…, M. The second “ranked heterogene-
ous” scenario includes systems where the first supplier has the smallest processing
rate and the processing rate of the rest suppliers increases as their corresponding
index increase (i.e., 𝜇1 < 𝜇2 < ⋯ < 𝜇M ). The last “random heterogeneous” scenario
includes systems where the processing rates are randomly distributed among the
suppliers.
The data used for the “ranked heterogeneous” and “random heterogeneous” sce-
narios are given in Table 13.

13
 724 M. Vidalis et al.

6.1 Analysis of balanced systems

The balanced case and especially the evolution of throughput for the above three
scenarios for different combinations of system parameters is examined first. More
specifically, for each number of merging suppliers M = 1,…,5, the case where
1 ≤ Pj ≤ 10, A = 5 and C = 1 and the case where 1 ≤ Pj ≤ 10, A = 5 and C = 5 are con-
sidered. The shape of the surfaces (concave and smooth), regarding the evolution
of throughput indicates that there is always a unique maximum value of throughput
which is obtained for a specific combination of the balanced system’s parameters.
Due to space limitations the curve of throughput for homogeneous and random het-
erogeneous configurations for M = 2 suppliers, 1 ≤ Pj ≤ 10, A = 5 and C = 5 is pre-
sented in Fig. 2.
The next point of interest is the search of the optimal vector of supplier’s, Pj ,
j = 1,2,…,M, storage area and DC capacity that maximizes the throughput of sys-
tems with M = 2, 3, 4 and 5 suppliers, 1 ≤ Pj ≤ 5, 0 ≤ A ≤ 10 and 1 ≤ C ≤ 5, for the
balanced case.
The numerical results given in Table 14, indicate that for each scenario and each
value of M merging suppliers, the objective to maximize the throughput can be
achieved by selecting the maximum feasible values of the system parameters (i.e.,
the maximum values of Pj, A and C). Another rule that comes out from these results
is that while the number of M merging suppliers increases, the throughput of the
system in all scenarios increases (even with a slight difference) as well. Therefore
the most critical point to get the maximum throughput value is to use the maximum
feasible values of the rest system parameters. Finally it can be noticed that for the
same number M of suppliers all three scenarios provide almost the same throughput
value when the maximum values of Pj, A and C are used.
The evolution of the performance measure ­WIPsystem, for the balanced case and
for all three different scenarios is examined next. More specifically, for each num-
ber of merging suppliers M = 1,…,5, the case where 1 ≤ Pj ≤ 10, A = 5 and C = 1
and the case where 1 ≤ Pj ≤ 10, A = 5 and C = 5 are considered. Like in case where
the throughput was examined, the resulting shapes indicate that there is always a
minimum value of ­WIPsystem which we can be obtained for specific combinations
of the system’s parameters. Due to space limitations only the curves of W ­ IPsystem
for the homogeneous and the random heterogeneous scenarios for M = 2 suppliers,
1 ≤ Pj ≤ 10, A = 5 and C = 5 are presented in Fig. 3.

Table 13  Data used for the “ranked heterogeneous” and “random heterogeneous” scenarios
Number of Processing rates Processing rates
suppliers M Ranked Heterogeneous scenario Random Heterogeneous scenario

2 μ1 = 0.2, μ2 = 0.8 μ1 = 0.8, μ2 = 0.2

3 μ1 = 0.1, μ2 = 0.3, μ3 = 0.6 μ1 = 0.3, μ2 = 0.1, μ3 = 0.6
4 μ1 = 0.1, μ2 = 0.2, μ3 = 0.3, μ4 = 0.4 μ1 = 0.3, μ2 = 0.2, μ3 = 0.1, μ4 = 0.4
5 μ1 = 0.05, μ2 = 0.1, μ3 = 0.15, μ4 = 0.2, μ5 = 0.5 μ1 = 0.2, μ2 = 0.1, μ3 = 0.15, μ4 = 0.05,
μ5 = 0.5

13
Analysis of a two echelon supply chain with merging suppliers,… 725

P1
P2 P1
P2

Fig. 2  Balanced Case: Evolution of Throughput for Homogeneous (left) and random heterogeneous
(right) configurations for M = 2 suppliers, 1 ≤ Pj ≤ 10, A = 5 and C = 5

Like in the case of throughput, the optimal vector of supplier’s, Pj , j = 1,2,…,M,
storage area capacity, A and DC capacity, C that minimizes ­WIPsystem for systems
with M = 2, 3, 4 and 5 suppliers, 1 ≤ Pj ≤ 5, 0 ≤ A ≤ 10 and 1 ≤ C ≤ 5, for the all three
different scenarios is presented in Table 15.
The results presented in Table 15 indicate that for each scenario and each value
of M, M = 2,…,5 merging suppliers, the minimization of ­WIPsystem is obtained by
selecting the minimum feasible values of each system parameter (i.e., the minimum
values of Pj, A and C). Moreover, while the number of merging suppliers decreases,
the ­WIPsystem decreases as well for all the scenarios examined. Despite that, for the
same number of merging suppliers M, all the scenarios provide almost the same
minimum values of ­WIPsystem, the scenario of heterogeneous systems provide always
slightly lower ­WIPsystem values than the homogeneous scenario.
The next optimization problem examined in this section is to find the optimal
combination of the system parameters (i.e., the optimal vector of the system param-
eters) that achieves at least a desired level of throughput, ­THRlevel and at the same
time obtain the minimum feasible work in process of the system. The values of the
system parameters for the numerical results given in Table 16 for all scenarios are
M = 2, 3 4, 1 ≤ Pj ≤ 5, 0 ≤ A ≤ 15 and 1 ≤ C ≤ 5.
The numerical results presented in Table  16, indicate that for every scenario
examined, the system that achieves a specific desired throughput level and at the
same time provides the minimum feasible ­WIPsystem should have the minimum

Table 14  Optimal vector of suppliers that maximizes system’s throughput

M Ηomogeneous scenario Max THR Ranked Max Random Hetero- Max
optimal vector (P1,…, Ηeterogeneous THR geneous scenario THR
PM,A,C) scenario Optimal vector
Optimal vector (P1,…,PM,A,C)
(P1,…,PM,A,C)

5 5 5 5 5 5 10 5 0.9486 5 5 5 5 5 10 5 0.9434 5 5 5 5 5 10 5 0.9435

4 5 5 5 5 10 5 0.9468 5 5 5 5 10 5 0.9443 5 5 5 5 10 5 0.9447
3 5 5 5 10 5 0.9446 5 5 5 10 5 0.9415 5 5 5 10 5 0.9416
2 5 5 10 5 0.9417 5 5 10 5 0.9393 5 5 10 5 0.9415

13
 726 M. Vidalis et al.

P1
P2
P1 P2

Fig. 3  Evolution of W­ IPsystem for homogeneous (left) and random heterogeneous (right) scenario for
M = 2 suppliers, 1 ≤ Pj ≤ 10, A = 5 and C = 5

number of parallel supply channels at each supplier (i.e., one supply channel at
each supplier) and the minimum number of identical machines at the DC (i.e., one
machine at the DC). Additionally, for a fixed number of merging suppliers, the
capacity of the shared storage area increases when the desired throughput level
increases as well. Finally, the heterogeneous scenarios provide lower W
­ IPsystem val-
ues than the homogeneous scenario and more specifically the ranked heterogeneous
scenario provides the minimum ­WIPsystem values among all the scenarios examined.

6.2 Analysis of constrained systems

This section presents a similar analysis like the one given in the previous section for
the case of constrained systems under the three scenarios. The shape of the specific
surfaces (concave and smooth) for the constrained case have the same pattern as in
the unconstrained case regarding the evolution of throughput and ­WIPsystem. These
shapes indicate that there is always a unique maximum value of throughput and a
unique minimum value of ­WIPsystem which is obtained for a specific combination of
the constrained system’s parameters. Due to space limitations these surfaces are not
presented in this section. The evolution of throughput and W ­ IPsystem is examined for
all scenarios and combinations of the system parameters that were used for the bal-
anced case.

Table 15  Optimal vector of the system’s parameters that minimizes ­WIPsystem

M Ηomogeneous scenario minWIP Ranked minWIP Random minWIP
Optimal vector Ηeterogeneous Ηeterogeneous
(P1,…,PM,A,C) scenario scenario
Optimal vector Optimal vector
(P1,…,PM,A,C) (P1,…,PM,A,C)

5 1111101 5.7782 1111101 5.7426 1111101 5.7449

4 111101 4.7629 111101 4.7466 111101 4.7506
3 11101 3.7428 11101 3.7190 11101 3.7204
2 1101 2.7142 1101 2.6938 1101 2.7058

13
Analysis of a two echelon supply chain with merging suppliers,… 727

Table 16  Optimal combination of the system parameters to achieve at least a desired level of throughput
and obtain the minimum feasible ­WIPsystem
M THRlevel minWIPsystem minWIPsystem minWIPsystem Ran- Optimal vector
Ηomogeneous Ranked dom Ηeterogeneous for all configurations
scenario Ηeterogeneous scenario (P1,…,PM,A,C)
scenario

4 ≥ 0.80 5.4251 5.3936 5.4012 111111

≥ 0.85 6.6147 6.5606 6.5734 111131
≥ 0.90 8.2599 8.1852 8.2028 111161
≥ 0.92 9.8392 9.7521 9.7725 111191
≥ 0.94 11.9019 11.8044 11.8271 1 1 1 1 13 1
3 ≥ 0.80 4.9811 4.9206 4.9242 11121
≥ 0.85 5.5483 5.4753 5.4796 11131
≥ 0.90 7.6938 7.5905 7.5964 11171
≥ 0.92 8.7327 8.6205 8.6270 11191
≥ 0.94 10.7828 10.6589 10.6660 1 1 1 13 1
2 ≥ 0.80 3.9090 3.8607 3.8888 1121
≥ 0.85 5.0000 4.9357 4.9729 1141
≥ 0.90 6.5714 6.4935 6.5384 1171
≥ 0.92 8.1111 8.0251 8.0746 1 1 10 1
≥ 0.94 10.1428 10.0501 10.1034 1 1 14 1

The search of the optimal vector of the system parameters that maximizes through-
put or minimize W ­ IPsystem for systems with M = 2, 3, 4 and 5 suppliers, 1 ≤ Pj ≤ 5,
0 ≤ A ≤ 10 and 1 ≤ C ≤ 5, for the three constrained scenarios is considered first.
Table  17 provides similar results with the ones obtained for the balanced case.
More specifically, for all scenarios, the maximum value of throughput or the mini-
mum value of W ­ IPsystem is achieved when the system uses the maximum or the
minimum feasible values of the system parameters, respectively. Furthermore, for
all scenarios and for every number of M merging suppliers the values of maxTHR
are exactly the same. Additionally, when M decreases the m ­ inWIPsystem also
decreases, which is reasonable. Finally, for each number of merging suppliers M, the
­minWIPsystem value is observed to the Ranked Ηeterogeneous scenario.
The last point of interest, is to find the optimal vector that achieves at least a
desired level of throughput, and at the same time provides the minimum feasible
work in process of the system, ­WIPsystem. The same values of the system parameters
like the ones used for the balanced case are used here.
From the above table it is clear that for every scenario all the system parameters
should get their minimum values. In contradiction with the balanced case for most
of the examined cases the storage area capacity is zero and only when the desired
throughput level is very high the storage area capacity becomes equal to one (which
is still the minimum positive value). This is reasonable since the value of the mean
processing rate of the DC is two times the value of the mean processing rate of the
merging suppliers. For the same reason all scenarios have almost the same perfor-
mance measures for each combination of the system parameters.

13
 728 M. Vidalis et al.

Summarizing all the results presented in Tables  14, 15, 16, 17 and 18 and in
Figs. 2 and 3 the following conclusions can be done:

1. For both cases (balanced-constrained) there is always a maximum value of

throughput and a minimum value of ­WIPsystem which can be explored regarding
different combinations of the system’s parameters.
2. When the objective is to maximize the system’s throughput then all the param-
eters of the system should take their maximum feasible values (balanced and
constrained case).
3. When the objective is to minimize the ­WIPsystem then all the parameters of the
system should take their minimum feasible values (for both balanced and con-
strained cases).
4. When the objective is to simultaneously maximize the throughput and minimize
the ­WIPsystem, then the number of parallel supply channels at each supplier and
the number of the identical machines at the DC should take the minimum feasible
value (which is equal to one). In order to get higher throughput values while hav-
ing the minimum feasible value of ­WIPsystem, for the balanced case the storage
area capacity should be increased. For the constrained case is enough to increase
the storage area capacity from zero slot to one slot.
5. Comparing the two cases always the constrained case provides better results
regarding all scenarios and all performance measures.
6. For all cases the Ranked Ηeterogeneous scenario provides better results. This
fact confirms the argument made by Goldratt (1990) that the bottleneck of a
system should be the control point of the whole process and therefore should get
a preferential treatment. More specifically regarding the Ranked Heterogeneous
scenarios the first supplier which is the slowest among all (being the bottleneck
of the system) gets a preferential treatment since it has the highest priority among
all suppliers in blocking. This preferential treatment to the first supplier leads to
better results.
7. Finally, the managerial insight from all the results is that the most critical param-
eter to get higher values of throughput and minimum values of W ­ IPsystem is the
capacity of the shared storage area.

7 Conclusions and further research

A two echelon merge supply network is analyzed in this paper. The considered sys-
tem was modelled as continuous time discrete state Markov chain and an algorithm
for its performance evaluation was also presented. The numerical results from the
proposed algorithm showed a very good agreement with simulation. Additionally
the impact of the system parameters on its performance measures was also explored
using as a tool the proposed evaluative algorithm. The contribution of this paper is
that the proposed method can be used for the performance evaluation and optimi-
zation of merge-assembly supply chains and help practitioners to make decisions
about the optimal design and parameter’s selection in order to reduce operational
inefficiencies.

13
 Table 17  Optimal vectors of the constrained system to maximize throughput or minimize ­WIPsystem
M Ηomogeneous Optimal maxTHR/minWIPsystem Ranked Ηeterogeneous maxTHR/minWIPsystem Random maxTHR/minWIPsystem
vector (P1,…,PM,A,C) Optimal vector Ηeterogeneous Optimal
maxTHR/minWIPsys (P1,…,PM,A,C) vector (P1,…,PM,A,C)
maxTHR/minWIPsystem maxTHR/minWIPsystem

5 5 5 5 5 5 10 5/1 1 1 1 1 0 1 0.9999/5.4699 5 5 5 5 5 10 5/1 1 1 1 1 0 1 0.9999/5.45862 5 5 5 5 5 10 5/1 1 1 1 1 0 1 0.9999/5.4590

4 5 5 5 5 10 5/1 1 1 1 0 1 0.9999/4.4652 5 5 5 5 10 5/1 1 1 1 0 1 0.9999/4.4602 5 5 5 5 10 5/1 1 1 1 0 1 0.9999/4.4610
Analysis of a two echelon supply chain with merging suppliers,…

3 5 5 5 10 5/1 1 1 0 1 0.9999/3.4586 5 5 5 10 5/1 1 1 0 1 0.9999/3.4501 5 5 5 10 5/1 1 1 0 1 0.9999/3.4504

2 5 5 10 5/1 1 0 1 0.9999/2.4482 5 5 10 5/1 1 0 1 0.9999/2.4400 5 5 10 5/1 1 0 1 0.9999/2.4430
729

13
 730 M. Vidalis et al.

Table 18  Optimal combination of the system parameters in order to obtain the minimum feasible value
of ­WIPsystem achieving at least a desired level of throughput (constrained case)
M THRlevel minWIPsystem minWIPsystem minWIPsystem Optimal vector
Ηomogeneous Ranked Random for all configurations
Ηeterogeneous Ηeterogeneous (P1,…,PM,A,C)

4 ≥ 0.80 4.4652 4.4602 4.4610 111101

≥ 0.85 4.4652 4.4602 4.4610 111101
≥ 0.90 4.4652 4.4602 4.4610 111101
≥ 0.92 4.4652 4.4602 4.4610 111101
≥ 0.94 4.7080 4.7022 4.7031 111111
3 ≥ 0.80 3.4586 3.4501 3.4504 11101
≥ 0.85 3.4586 3.4501 3.4504 11101
≥ 0.90 3.4586 3.4501 3.4504 11101
≥ 0.92 3.7003 3.6905 3.6909 11111
≥ 0.94 3.7003 3.6905 3.6909 11111
2 ≥ 0.80 2.4482 2.4400 2.4430 1101
≥ 0.85 2.4482 2.4400 2.4430 1101
≥ 0.90 2.6885 2.6792 2.6826 1111
≥ 0.92 2.6885 2.6792 2.6826 1111
≥ 0.94 2.6885 2.6792 2.6826 1111

An extension of this research could be the analysis of a similar system where the
suppliers or unreliable machines at the DC may be unreliable. Another extension
could be the use of phase type distributions to model the processing rates of the sup-
pliers and of the machines at the DC. Finally the examined system may be consid-
ered as a push–pull type system with the addition of a storage area of finished goods
(BFG) after the DC that will satisfy an external demand rate.

Appendix A

Furthermore:

The matrix of the transition probabilities of the sub matrix (−S1 ∗𝜇1 ) D3(2,3,4),1,2
1
is the
same with the sub matrix (−1∗𝜇1 ) D3(2,3,4),1,2
1
 , with the only difference that −𝜇 1 has
been added to all diagonal cell values except from the last one.
The matrix of the transition probabilities of the sub matrix S1 ∗ U03(2,3,4),1,2 is a
diagonal matrix with all diagonal cell values equal to 2 ∗ 𝜇1 (since S1 = 2).
The matrix of the transition probabilities of the sub matrix (S1 − 1) ∗ U03(2,3,4),1,2 is
a diagonal matrix with all diagonal cell values equal to 1 ∗ 𝜇1 (since S1 − 1 = 1).
The matrix of the transition probabilities of the sub matrix N ∗ L13(2,3,4),1,2 is a
diagonal matrix with all diagonal cell values equal to 2 ∗ 𝜇1 (since N = 2 )
(see Tables 19, 20).

13
 0
Table 19  Matrix of the transition probabilities of sub matrix D3(2,3,4),1,2
2340 2341 2342 2343 2333 2323 2313 23b3 2243 2233 2223 2213

2340 − 2μ1 − 3μ2  2μ1 + 3μ2 

− 4μ3 + 4μ3
2341 μ − 2μ1 − 3μ2  2μ1 + 3μ2 + 4μ3
− 4μ3 − μ
2342 2μ − 2μ1 − 3μ2  2μ1 + 3μ2 + 4μ3
− 4μ3 − 2μ
2343 2μ − 2μ1 − 3μ2  4μ3 3μ2
− 4μ3 − 2μ
2333 2μ − 2μ1 − 3μ2 3μ3 3μ2
 − 3μ3 − 2μ
2323 2μ − 2μ1 − 3μ2  2μ3 3μ2
− 2μ3 − 2μ
2313 2μ − 2μ1 − 3μ2 μ3 3μ2
 − μ3 − 2μ
23b3 2μ − 2μ1 − 3μ
2 − 2μ
Analysis of a two echelon supply chain with merging suppliers,…

2243 2μ − 2μ1 − 2μ2  4μ3

− 4μ3 − 2μ
2233 2μ − 2μ1 − 2μ2  3μ3
− 3μ3 − 2μ
2223 2μ − 2μ1 − 2μ2  2μ3
− 2μ3 − 2μ
2213 2μ − 2μ1 − 2μ2 
− μ3 − 2μ
22b3 2μ
2143 2μ
2133 2μ
2123 2μ
2113 2μ
731

13
 Table 19  (continued)
732

2340 2341 2342 2343 2333 2323 2313 23b3 2243 2233 2223 2213

21b3

13
2b43
2b33
2b23
2b13
2bb3

22b3 2143 2133 2123 2113 21b3 2b43 2b33 2b23 2b13 2bb3

2340
2341
2342
2343
2333
2323
2313
23b3 3μ2
2243 2μ2
2233 2μ2
2223 2μ2
2213 μ3 2μ2
22b3 − 2μ1 − 2μ2  2μ2
− 2μ
2143 − 2μ1 − μ2  4μ3 μ2
− 4μ3 − 2μ
2133 − 2μ1 − μ2  3μ3 μ2
− 3μ3 − 2μ
M. Vidalis et al.
 Table 19  (continued)

22b3 2143 2133 2123 2113 21b3 2b43 2b33 2b23 2b13 2bb3

2123 − 2μ1 − μ2  2μ3 μ2

− 2μ3 − 2μ
2113 − 2μ1 − μ2  μ3 μ2
− μ3 − 2μ
21b3 2μ − 2μ1 − μ2  μ2
− 2μ
2b43 2μ − 2μ1 − 4μ3  4μ3
− 2μ
2b33 2μ − 2μ1 − 3μ3  3μ3
− 2μ
2b23 2μ − 2μ1 − 2μ3  2μ3
− 2μ
2b13 2μ − 2μ1 − μ3  μ3
− 2μ
2bb3 2μ − 2μ1 
Analysis of a two echelon supply chain with merging suppliers,…

− 2μ
733

13
 1
Table 20  Matrix of the transition probabilities of sub matrix (−1∗𝜇1 ) D3(2,3,4),1,2
734

1343 1333 1323 1313 13b3 1243 1233 1223 1213 12b3

13
1343 − μ1 − 3μ2 4μ3 3μ2
 − 4μ3 − 2μ
1333 − μ1 − 3μ2  3μ3 3μ2
− 3μ3 − 2μ
1323 − μ1 − 3μ2  2μ3 3μ2
− 2μ3 − 2μ
1313 − μ1 − 3μ2  μ3 3μ2
− μ3 − 2μ
13b3 − μ1 − 3μ2 − 2μ 3μ2
1243 − μ1 − 2μ2 − 4μ3 − 2μ 4μ3
1233 − μ1 − 2μ2 − 3μ3 − 2μ 3μ3
1223 − μ1 − 2μ2  2μ3
− 2μ3 − 2μ
1213 − μ1 − 2μ2  μ3
− μ3 − 2μ
12b3 − μ1 − 2μ2 − 2μ
1143
1133
1123
1113
11b3
1b43
1b33
1b23
1b13
1bb3
M. Vidalis et al.
 Table 20  (continued)
1143 1133 1123 1113 11b3 1b43 1b33 1b23 1b13 1bb3

1343
1333
1323
1313
13b3
1243 2μ2
1233 2μ2
1223 2μ2
1213 2μ2
12b3 2μ2
1143 − μ1 − μ2  4μ3 μ2
− 4μ3 − 2μ
1133 − μ1 − μ2  3μ3 μ2
− 3μ3 − 2μ
Analysis of a two echelon supply chain with merging suppliers,…

1123 − μ1 − μ2  2μ3 μ2

− 2μ3 − 2μ
1113 − μ1 − μ2  μ3 μ2
− μ3 − 2μ
11b3 − μ1 − μ2 − 2μ μ2
1b43 − μ1 − 4μ3 − 2μ 4μ3
1b33 − μ1 − 3μ3 − 2μ 3μ3
1b23 − μ1 − 2μ3 − 2μ 2μ3
1b13 − μ1 − μ3 − 2μ μ3
1bb3 − μ1 − 2μ
735

13
 Appendix B
736

Table 21 presents the form of sub matrix (2(3,4),1,2).

13
Table 21  Matrix of the transition probabilities of sub matrix (2(3,4),1,2)
340 341 342 343 333 323 313 3b3 243 233 223 213

340 − 3μ1 − 4μ2 3μ1 + 4μ2

341 μ − 3μ1 − 4μ2– 3μ1 + 4μ2
μ
342 2μ − 3μ1 − 4μ2 − 2μ 3μ1 + 4μ2
343 2μ − 3μ1 − 4μ2 − 2μ 4μ2 3μ1
333 2μ − 3μ1 − 3μ2 − 2μ 3μ2 3μ1
323 2μ − 3μ1 − 2μ2 − 2μ 2μ2 3μ1
313 2μ − 3μ1 − μ2– μ2 3μ1
2μ
3b3 2μ − 3μ1 − 2μ
243 2μ − 2μ1 − 4μ2 − 2μ 4μ2
233 2μ − 2μ1 − 3μ2 − 2μ 3μ2
223 2μ − 2μ1 − 2μ2 2μ2
–2μ
213 2μ − 2μ1 − μ2 
− 2μ
2b3 2μ
143 2μ
133 2μ
123 2μ
113 2μ
1b3
b43
M. Vidalis et al.
 Table 21  (continued)
340 341 342 343 333 323 313 3b3 243 233 223 213

b33
b23
b13
bb3

2b3 143 133 123 113 1b3 b43 b33 b23 b13 bb3

340
341
342
343
333
323
313
3b3 3μ1
Analysis of a two echelon supply chain with merging suppliers,…

243 2μ1
233 2μ1
223 2μ1
213 μ2 2μ1
2b3 − 2μ1 − 2μ 2μ1
143 − μ1 − 4μ2 − 2μ 4μ2 μ1
133 − μ1 − 3μ2 − 2μ 3μ2 μ1
123 − μ1 − 2μ2 − 2μ 2μ2 μ1
113 − μ1 − μ2 − 2μ μ2 μ1
1b3 2μ − μ1 − 2μ μ1
737

13
 Table 21  (continued)
738

2b3 143 133 123 113 1b3 b43 b33 b23 b13 bb3

13
b43 2μ − 4μ2 − 2μ 4μ2
b33 2μ − 3μ2 − 2μ 3μ2
b23 2μ − 2μ2 − 2μ 2μ2
b13 2μ − μ2 − 2μ μ2
bb3 2μ − 2μ
M. Vidalis et al.
Analysis of a two echelon supply chain with merging suppliers,… 739

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