Supply-chain coordination under an inventory-level-dependent demand rate
ABSTRACT In this paper, we consider coordination issues of a distribution system composed of a manufacturer and a retailer. The manufacturer offers a single product to the retailer and the demand for the product at the retailer's end is stock dependent. We focus on three aspects of the resulting supply chain. First, we discuss the manufacturer-Stackelberg game structure to determine how the manufacturer sets the wholesale price of the product and how the retailer in turn determines the order quantity. We assume that both the parties share relevant cost information. Then we develop a simple profit-sharing mechanism that would ultimately achieve perfect channel coordination. Finally, the manufacturer is provided with a quantity discount scheme to induce the retailer to increase the order quantity so as to maximize the manufacturer's profit. We show that this discount scheme also achieves the perfect coordination of the whole channel. Numerical examples are used to illustrate the models.
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ABSTRACT: This article develops a supply chain coordination model with a single-vendor and a single-buyer. The vendor manufactures the product in lots and delivers to the buyer in equal shipments. However, the vendor’s production process is not perfectly reliable. During a production run, the process may shift from an in-control state to an out-of-control state at any random time and produces some defective items. The buyer whose demand is assumed to be linear function of the on-hand inventory performs a screening process immediately after each replenishment. Moreover, the buyer’s inventory is deteriorated at a constant rate over time. The vendor-buyer coordination policy is determined by minimizing the average cost of the supply chain. It is observed from the numerical study that channel coordination earns significant cost savings over the non-coordinated policy.International Journal of Industrial Engineering Computations. 01/2011;
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ABSTRACT: We explore coordination issues of a two-echelon supply chain, consisting of a distributor and a retailer. The effect of revenue-sharing contract mechanism is examined under stock-time-price-sensitive demand rate. First, we investigate relationships between distributor and retailer under noncooperative distributor-Stackelberg games. Then we establish analytically that revenue sharing contact is able to coordinate the system and leads to the win-win outcomes. Finally, numerical examples are presented to compare results between the different models.Advances in Operations Research 01/2012; 2012.
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ABSTRACT: The replenishment size/production lot size problem both for perfect and imperfect quality products studied in this paper is motivated by the optimal strategy in a three layer supply chain consisting of multiple suppliers, manufacturers and retailers. In this model, each manufacturer produces each product with a combination of several raw materials which are supplied by each supplier. The defective products at suppliers and manufacturers are sent back to the respective upstream members at lower price than the respective purchasing price. Finally, the expected average profits of suppliers, manufacturers and retailers are formulated by trading off set up costs, purchasing costs, screening costs, production costs, inventory costs and selling prices. The objective of this chain is to compare between the collaborating system and Stakelberg game structure so that the expected average profit of the chain is maximized. In a numerical illustration, the optimal solution of the collaborating system shows a better optimal solution than the approach by Stakelberg.Applied Mathematics and Computation 01/2014; 229:139–150. · 1.35 Impact Factor