The use of a premium-payment scheme in a supply chain involving capacity acquisition

2007 ◽  
Vol 181 (1) ◽  
pp. 207-223 ◽  
Author(s):  
Jian Yang ◽  
Shitao Yang
Keyword(s):  
Supply Chain ◽  
Payment Scheme ◽  
Premium Payment ◽  
Capacity Acquisition

scholarly journals Impact of Price-Sensitive Demand and Premium Payment Scheme on Bullwhip Effect

2022 ◽  
Vol 15 (1) ◽  
pp. 1-24
Author(s):  
Mona Verma ◽  
Reena Jain ◽  
Chandra K. Jaggi
Keyword(s):  
Supply Chain ◽  
Numerical Analysis ◽  
Lead Time ◽  
Bullwhip Effect ◽  
Capacity Constraints ◽  
Price Variation ◽  
Payment Scheme ◽  
Premium Payment ◽  
The Impact

Bullwhip effect reduces the efficiency, responsiveness, and value of the supply chain. There are some indirect causes like lead time, the number of echelons, and some direct causes of bullwhip effect such as rationing or price variation. Due to capacity constraints, retailers are forced to experience rationing of their demands. Fear of rationing usually gives rise to manipulable demand and hence increases the bullwhip effect. Moreover, if the retailer’s demand is price sensitive then it will cause price variation. The offerings of premium payment by retailers due to unfulfilled demand lure the supplier to extend his existing capacity and to allocate them more supply. In this paper, an attempt has been made to mitigate the impact of the bullwhip effect using a premium payment scheme. A technique has been coined that will help in reducing the bullwhip effect. The increased value of the supply chain on using a premium payment scheme is proof of the reduction of the bullwhip effect. Results are validated through numerical analysis.

scholarly journals Impact of Price Sensitive Demand and Premium Payment Scheme on Bullwhip Effect

2022 ◽  
Vol 15 (1) ◽  
pp. 0-0
Keyword(s):  
Supply Chain ◽  
Numerical Analysis ◽  
Lead Time ◽  
Bullwhip Effect ◽  
Capacity Constraints ◽  
Price Variation ◽  
Payment Scheme ◽  
Premium Payment ◽  
The Impact

Bullwhip effect reduces the efficiency, responsiveness, and value of the supply chain. There are some indirect causes like lead time, the number of echelons, and some direct causes of bullwhip effect such as rationing or price variation. Due to capacity constraints, retailers are forced to experience rationing of their demands. Fear of rationing usually gives rise to manipulable demand and hence increases the bullwhip effect. Moreover, if the retailer’s demand is price sensitive then it will cause price variation. The offerings of premium payment by retailers due to unfulfilled demand lure the supplier to extend his existing capacity and to allocate them more supply. In this paper, an attempt has been made to mitigate the impact of the bullwhip effect using a premium payment scheme. A technique has been coined that will help in reducing the bullwhip effect. The increased value of the supply chain on using a premium payment scheme is proof of the reduction of the bullwhip effect. Results are validated through numerical analysis.

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