Cost and Profit Distributions in Allied Supply Chains

This study presents a comprehensive model of an integrated supply chain system comprising two multi-tiered chains. These two chains play a crucial role in the system, with one dedicated to generating external revenue and the other focusing on manufacturing the machinery, tools, and equipment required for the entire allied supply chain system. The main interest of this study lies in the monetary flows, specifically addressing the cost and profit distributions concerning the cost-to-revenue and profit-to-revenue ratios. Utilizing the developed analytical model, several key findings emerged. In allied supply chain systems with many tiers, externally sourced materials diminish, and material and asset cost-to-revenue ratios are irrelevant for determining personnel cost and profit distribution. Furthermore, two inverse relationships were identified: The higher the personnel cost-to-revenue ratio, the lower the total profit. Conversely, the higher the profit-to-revenue ratio is, the lower the total personnel cost. These insights contribute to a better understanding of the monetary flows and the distribution of costs and profits in allied supply chain systems.