scholarly journals Optimal ordering decisions in mass customization supply chain with overconfident retailer

2021 ◽  
Author(s):  
Bayi Cheng ◽  
Ruofan Li ◽  
Xiaoxi Zhu ◽  
Mi Zhou ◽  
Xiongfei Cao
Keyword(s):  
Supply Chain ◽  
Mass Customization ◽  
Decision Makers ◽  
Optimal Order ◽  
Market Demand ◽  
Order Quantity ◽  
Optimal Decisions ◽  
Modular Production ◽  
Optimal Ordering ◽  
The Relationship

In this paper, we analyze the optimal order-quantity decisions in a supply chain with mass customization (MC) manufacturer and overconfident retailer. First, we consider a newsvendor model in which an unbiased retailer sells mass customized products. The retailer needs to make order quantity decisions before the selling season. Meanwhile, the supplier is a mass customization manufacturer and implements modular production. The supply process is uncertain, as the real quantity the retailer received is the order quantity multiplied by a random yield rate. Second, two overconfident models are considered and theorems are proposed. In the first model, the behavioral bias of overconfidence only affects the retailer's judgment of variance of market demand. In the second model, the behavior bias of overconfidence affects not only the retailer's cognition of the variance of market demand, but also his cognition of the expectation of market demand. In addition, the relationship between the optimal decisions and the modularity level is obtained. Finally, we provide managerial insights for the decision makers of the retailers and the manufacturers on order quantity and modularity level, respectively.

scholarly journals Optimal Financing Order Decisions of a Supply Chain under the Retailer's Delayed Payment

2014 ◽  
Vol 2014 ◽  
pp. 1-8 ◽  
Author(s):  
Honglin Yang ◽  
Ya Yu ◽  
Yong Zha ◽  
Jijun Yuan
Keyword(s):  
Numerical Simulation ◽  
Supply Chain ◽  
Trade Credit ◽  
Equilibrium Analysis ◽  
Optimal Order ◽  
Order Quantity ◽  
Optimal Decisions ◽  
Game Equilibrium ◽  
Optimal Order Quantity ◽  
To Receive

In real supply chain, a capital-constrained retailer has two typical payment choices: the up-front payment to receive a high discount price or the delayed payment to reduce capital pressure. We compare with the efficiency of optimal decisions of different participants, that is, supplier, retailer, and bank, under both types of payments based on a game equilibrium analysis. It shows that under the equilibrium, the delayed payment leads to a greater optimal order quantity from the retailer compared to the up-front payment and, thus, improves the whole benefit of the supply chain. The numerical simulation for the random demand following a uniform distribution further verifies our findings. This study provides novel evidence that a dominant supplier who actively offers trade credit helps enhance the whole efficiency of a supply chain.

scholarly journals Impact of Loss-Aversion on a Financially-Constrained Supply Chain

2019 ◽  
Vol 11 (9) ◽  
pp. 2680
Author(s):  
Jinpyo Lee
Keyword(s):  
Supply Chain ◽  
Interest Rate ◽  
Loss Aversion ◽  
Wholesale Price ◽  
Decision Makers ◽  
Optimal Decision ◽  
Optimal Order ◽  
Order Quantity ◽  
Credit Guarantee ◽  
The Interest Rate

Traditionally, in the area of production and operations management, the financial states and decision-makers’ behaviour regarding loss have been ignored in the supply chain, which may lead to infeasible or unrealistic practices or even catastrophic losses in practical supply chain operations. Therefore, this study aims to provide a model for operational efficiency in a financially constrained supply-chain system consisting of a financially deficient retailer, a supplier, and a bank, and to analyse the impact of the behaviour of the bank and the supplier on the operational decision. It is assumed that the bank provides a loan to the retailer considering the supplier’s credit guarantee for the retailer. The supplier’s credit guarantee implies that, if the retailer goes bankrupt after the sales season, then a pre-guaranteed proportion of the retailer’s loan is repaid by the supplier. Moreover, to capture the decision-makers’ behaviour regarding loss, it is assumed that the supplier and the bank are loss-averse in their risk preference on the final profit. Under this circumstance, it is intended to draw the theoretical implications by analysing a loss-averse behaviour model for a supplier and a bank, in which a kinked piecewise linear and concave utility function is considered. The optimal decision is analytically derived for the retailer (the optimal order quantity), the supplier (the optimal wholesale price), and the bank (the optimal interest rate). In addition, a sensitivity analysis is conducted to investigate how the model parameters affect the optimal decision for the retailer, the supplier, and the bank under different degrees of loss-aversion. The optimal decisions are shown to be highly affected by the degree of the loss-aversion coefficient of the bank and the supplier and to be more conservative than the result in the traditional case which optimises the risk-neutral expected profit (the unit degree of loss-aversion). The analytical results can be summarised as follows. First, as the wholesale price and the interest rate increase, the optimal order quantity decreases. Second, the more loss-averse the supplier is, the higher the optimal wholesale price that is offered to the retailer by the supplier. Third, the larger the credit guarantee that is provided to the retailer by the supplier, the higher the optimal wholesale price that is provided to the retailer. Fourth, the more loss-averse the bank is, the higher the interest rate that is offered to the retailer; and the larger the credit guarantee that is provided by the supplier, the lower the interest rate that is offered to the retailer.

scholarly journals Supply Chain Contracts with Multiple Retailers in a Fuzzy Demand Environment

2013 ◽  
Vol 2013 ◽  
pp. 1-12 ◽  
Author(s):  
Shengju Sang
Keyword(s):  
Supply Chain ◽  
Revenue Sharing ◽  
Triangular Fuzzy Number ◽  
Expected Profit ◽  
Optimal Order ◽  
Market Demand ◽  
Order Quantity ◽  
Supply Chain Contracts ◽  
Fuzzy Demand ◽  
Sets Theory

This study investigates supply chain contracts with a supplier and multiple competing retailers in a fuzzy demand environment. The market demand is considered as a positive triangular fuzzy number. The models of centralized decision, return contract, and revenue-sharing contract are built by the method of fuzzy cut sets theory, and their optimal policies are also proposed. Finally, an example is given to illustrate and validate the models and conclusions. It is shown that the optimal total order quantity of the retailers fluctuates at the center of the fuzzy demand. With the rise of the number of retailers, the optimal order quantity and the fuzzy expected profit for each retailer will decrease, and the fuzzy expected profit for supplier will increase.

scholarly journals Optimal Order Policies for Dual-Sourcing Supply Chains under Random Supply Disruption

2019 ◽  
Vol 11 (3) ◽  
pp. 698 ◽  
Author(s):  
Rongfang Yan ◽  
Dejun Kou ◽  
Bin Lu
Keyword(s):  
Supply Chain ◽  
Service Level ◽  
Optimal Order ◽  
Order Quantity ◽  
Dual Sourcing ◽  
Closed Form Solutions ◽  
Optimal Decisions ◽  
Optimal Order Quantity ◽  
Constrained Model ◽  
Disruption Time

In this paper, we investigate inventory and order strategies of a two-echelon supply chain, which is composed of two unreliable suppliers that are subject to random disruption. We develop the gross weighted profit benchmark model and the service level constrained model of the supply chain, respectively. We derive the retailer’s optimal order quantity and analyze the retailer’ optimal order policy and also obtain the analytical closed-form solutions. In addition, some numerical examples are provided to illustrate the effect of disruption time, disruption probability and fill rate on the optimal decisions and expected profit.

scholarly journals Coping with Loss Aversion in the Newsvendor Model

2015 ◽  
Vol 2015 ◽  
pp. 1-11 ◽  
Author(s):  
Jianwu Sun ◽  
Xinsheng Xu
Keyword(s):  
Expected Utility ◽  
Loss Aversion ◽  
Confidence Level ◽  
Profit Maximization ◽  
Optimal Order ◽  
Market Demand ◽  
Newsvendor Model ◽  
Order Quantity ◽  
Decision Bias ◽  
Optimal Order Quantity

We introduce loss aversion into the decision framework of the newsvendor model. By introducing the loss aversion coefficientλ, we propose a novel utility function for the loss-averse newsvendor. First, we obtain the optimal order quantity to maximize the expected utility for the loss-averse newsvendor who is risk-neutral. It is found that this optimal order quantity is smaller than the expected profit maximization order quantity in the classical newsvendor model, which may help to explain the decision bias in the classical newsvendor model. Then, to reduce the risk which originates from the fluctuation in the market demand, we achieve the optimal order quantity to maximize CVaR about utility for the loss-averse newsvendor who is risk-averse. We find that this optimal order quantity is smaller than the optimal order quantity to maximize the expected utility above and is decreasing in the confidence levelα. Further, it is proved that the expected utility under this optimal order quantity is decreasing in the confidence levelα, which verifies that low risk implies low return. Finally, a numerical example is given to illustrate the obtained results and some management insights are suggested for the loss-averse newsvendor model.

scholarly journals Coordination of Supply Chain with One Supplier and Two Competing Risk-Averse Retailers under an Option Contract

2016 ◽  
Vol 2016 ◽  
pp. 1-11 ◽  
Author(s):  
Rui Wang ◽  
Shiji Song ◽  
Cheng Wu
Keyword(s):  
Supply Chain ◽  
Conditional Value At Risk ◽  
Optimal Order ◽  
Pareto Optimum ◽  
Risk Averse ◽  
Order Quantity ◽  
Supply Chain System ◽  
Chain System ◽  
Option Contract ◽  
Optimal Order Quantity

This paper studies an option contract for coordinating a supply chain comprising one risk-neutral supplier and two risk-averse retailers engaged in promotion competition in the selling season. For a given option contract, in decentralized case, each risk-averse retailer decides the optimal order quantity and the promotion policy by maximizing the conditional value-at-risk of profit. Based on the retailers’ decision, the supplier derives the optimal production policy by maximizing expected profit. In centralized case, the optimal decision of the supply chain system is obtained. Based on the decentralized and centralized decision, we find the coordination conditions of the supply chain system, which can optimize the supply chain system profit and make the profits of the supply chain members achieve Pareto optimum. As for the subchain, we also find the coordination conditions, which generalize the results of the supply chain with one supplier and one retailer. Our analysis and numerical experiments show that there exists a unique Nash equilibrium between two retailers, and the optimal order quantity of each retailer increases (decreases) with its own (competitor’s) promotion level.

scholarly journals Trade Credit with Barter in a Capital-Constrained Supply Chain

2021 ◽  
Vol 13 (20) ◽  
pp. 11361
Author(s):  
Yangyang Huang ◽  
Zhenyang Pi ◽  
Weiguo Fang
Keyword(s):  
Supply Chain ◽  
Trade Credit ◽  
Wholesale Price ◽  
Uncertain Demand ◽  
Equilibrium Strategy ◽  
Optimal Order ◽  
Order Quantity ◽  
Supply Rate ◽  
Optimal Order Quantity ◽  
And Performance

Barter has emerged to alleviate capital pressure, maximize the circulation of goods, and facilitate the disposal of excess inventory. This study considers a two-level supply chain consisting of a manufacturer and a capital-constrained retailer with trade credit, in which the retailer exchanges unsold products for needed subsidiary products on a barter platform. The retailer’s optimal order quantity and the manufacturer’s wholesale price are derived, and the influences of barter and other factors on the equilibrium strategy and performance of the supply chain are examined; these results are verified and supplemented by numerical simulation. We find that the retailer can increase profit by bartering when facing highly uncertain demand, that the retailer’s optimal order quantity increases with the supply rate and demand for subsidiary products, and that both manufacturer and retailer benefit from the high supply rate of subsidiary products. However, barter induces the manufacturer to raise the wholesale price to prevent its profit from being harmed. In addition, the manufacturer suffers from the retailer’s initial capital.

scholarly journals Contracts Adjustment under Bilateral Information Updating in a Supply Chain

Complexity ◽  
2020 ◽  
Vol 2020 ◽  
pp. 1-15
Author(s):  
Xinhui Wang ◽  
Yingsheng Su ◽  
Zihan Zhou ◽  
Yiling Fang
Keyword(s):  
Supply Chain ◽  
Production Cost ◽  
Wholesale Price ◽  
Transfer Payment ◽  
Market Demand ◽  
Order Quantity ◽  
Minimum Order ◽  
Information Updating ◽  
Minimum Order Quantity ◽  
Market Outlook

This paper investigates contracts adjustment between one manufacturer and one retailer under bilateral information updating. The manufacturer incurs uncertain production cost and the retailer faces uncertain demand, but they can acquire independent signals to update production cost and demand, respectively. They commit an initial agreement on an initial wholesale price, minimum order quantity, and information sharing as well as the transfer payment and decisions adjustment when information is updated. We find that due to the joint impact of production cost variation and market variation, the manufacturer may not decrease (increase) her wholesale price when the updated production cost is lower (higher) than expected. The retailer places an additional order even if the wholesale price rises when the market outlook is good, but places an order with the minimum order quantity even if the wholesale price falls when the market outlook is bad. Secondly, for a certain level of information accuracy of the production cost and market demand, the retailer is always better off with information updating, but the manufacturer may be worse off with information updating when facing a bad market outlook. Thirdly, when information accuracy of the production cost and market demand varies, the manufacturer only benefits from a high accuracy of production cost. Profits of the retailer and the supply chain are increasing (decreasing) with accuracy of production cost if the updated production cost is larger (smaller) than expected.

Impacts of supply chain planning and integration on mass customization

2018 ◽  
Vol 29 (3) ◽  
pp. 608-628 ◽  
Author(s):  
Gensheng (Jason) Liu ◽  
Weiyong Zhang ◽  
Chundong Guo
Keyword(s):  
Supply Chain ◽  
Mass Customization ◽  
Structural Equation ◽  
Functional Integration ◽  
Equation Model ◽  
Content Type ◽  
Supplier Integration ◽  
Processing Theory ◽  
Focal Firm ◽  
The Relationship

PurposeEffective mass customization (MC) depends on accurately identifying customer needs and procuring appropriate components from supply base to manufacture the required product configurations in a timely manner. In essence, effective MC for a focal firm is contingent on effective supply chain management. However, extant literature is not very clear on how supply chain (SC) planning and integration activities affect MC. The purpose of this paper is to fill the gap by examining the impacts of SC-planning and SC-integration on MC.Design/methodology/approachOrganizational information processing theory is used to link SC-integration with MC ability, and a link is hypothesized between SC-planning and SC-integration. The structural equation model is then analyzed using data from 262 manufacturing plants.FindingsIt is found that SC-integration fully mediates the relationship between SC-planning and MC-ability.Research limitations/implicationsThe SC-integration measure is from a focal manufacturer’s standpoint, rather than the standpoint of the entire SC.Practical implicationsThe results indicate that using a SC perspective in planning activities helps a focal firm integrate with key stakeholders along the SC, which subsequently helps the firm mass customize. Practitioners should recognize the added importance of SC-planning and SC-integration if they want to mass customize.Originality/valueThis study provides a theoretical foundation for the relationship between SC-integration and MC. It also provides a more comprehensive conceptualization of SC-integration, which includes supplier integration, customer integration, as well as internal functional integration which was neglected in many previous studies.

An Optimal Inventory Policy for Items Having Constant Demand and Constant Deterioration Rate with Trade Credit

2012 ◽  
Vol 5 (2) ◽  
pp. 89-95 ◽  
Author(s):  
R. P. Tripathi ◽  
S. S. Misra
Keyword(s):  
Trade Credit ◽  
Optimal Order ◽  
Order Quantity ◽  
Inventory Models ◽  
Inventory Policy ◽  
Deterioration Rate ◽  
Optimal Order Quantity ◽  
Optimal Ordering ◽  
Constant Deterioration ◽  
Ordering Quantity

In most of the classical inventory models the demand is considered as constant. In this paper the model has been framed to study the items whose demand and deterioration both are constant. The authors developed a model to determine an optimal order quantity by using calculus technique of maxima and minima. Thus, it helps a retailer to decide its optimal ordering quantity under the constraints of constant deterioration rate and constant pattern of demand.

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