Retailer or e-tailer? Strategic pricing and economic-lot-size decisions in a competitive supply chain with drop-shipping

2010 ◽  
Vol 61 (11) ◽  
pp. 1645-1653 ◽  
Author(s):  
W K Chiang ◽  
Y Feng
Keyword(s):  
Supply Chain ◽  
Lot Size ◽  
Strategic Pricing

scholarly journals Inventory control in a two-level supply chain with learning, quality and inspection errors

2021 ◽  
Author(s):  
Mehmood Khan
Keyword(s):  
Supply Chain ◽  
Product Quality ◽  
Inventory Management ◽  
Human Error ◽  
Threshold Value ◽  
Process Quality ◽  
Lot Size ◽  
Defective Items ◽  
Inspection Errors ◽  
Screening Cost

A common measure of quality for a buyer or a vendor is the defect rate. Defects may represent an attribute, a dimension or a quantity. They may be classified as product quality defects or process quality defects. Product quality defects may be caused by human error which can de due to fatigue, lack of proper training, or other reasons. For example, an inspector may misclassify a defective fuel tank of a car as good. On the other hand, process quality defects maybe caused by a machine going out-of-control. While many researchers assume that the screening processes which separate the defective items are error-free, it would be realistic to consider misclassification errors in this process. Beside inspection errors, learning is another human factor that brings in enhancement in the overall performance of a supply chain. Learning is inherent when there are workers involved in a repetitive type of production process. Learning and forgetting are even more important in manufacturing environments that emphasize on flexibility where workers are cross-trained to do different tasks and where products have a short life cycle. Inventory management with learning in quality, inspection and processing time will be the focus of this thesis. A number of models will be developed for a buyer and/or a two level supply chain to incorporate these human factors. The key findings of this work may be summarized as 1. Inspection errors significantly affect the annual profit. 2. An increase in the unit screening cost reduces the annual profit to a great extent at slower rates of learning. 3. For the two-level supply chain we investigated, learning in production drops the annual cost significantly while the learning in supplier's quality results in a situation where there are no defectives from the suppliers. 4. Type II error may seem to be beneficial for a two level supply chain as the order/lot size goes down and thus affects the costs of ordering, production and screening. 5. Consignment stocking policy performs better than conventional stocking when holding costs go higher than a threshold value.

scholarly journals Simulation-Based Optimization of a Two-Echelon Continuous Review Inventory Model with Lot Size-Dependent Lead Time

Processes ◽  
2020 ◽  
Vol 8 (9) ◽  
pp. 1014
Author(s):  
Ibrahim Alharkan ◽  
Mustafa Saleh ◽  
Mageed Ghaleb ◽  
Abdulsalam Farhan ◽  
Ahmed Badwelan
Keyword(s):  
Supply Chain ◽  
Lead Time ◽  
Shop Floor ◽  
Lot Size ◽  
Continuous Review ◽  
Inventory Costs ◽  
Size Dependent ◽  
Simulation Based ◽  
Simulation Based Optimization ◽  
Total Inventory

This study analyzes a stochastic continuous review inventory system (Q,r) using a simulation-based optimization model. The lead time depends on lot size, unit production time, setup time, and a shop floor factor that represents moving, waiting, and lot size inspection times. A simulation-based model is proposed for optimizing order quantity (Q) and reorder point (r) that minimize the total inventory costs (holding, backlogging, and ordering costs) in a two-echelon supply chain, which consists of two identical retailers, a distributor, and a supplier. The simulation model is created with Arena software and validated using an analytical model. The model is interfaced with the OptQuest optimization tool, which is embedded in the Arena software, to search for the least cost lot sizes and reorder points. The proposed model is designed for general demand distributions that are too complex to be solved analytically. Hence, for the first time, the present study considers the stochastic inventory continuous review policy (Q,r) in a two-echelon supply chain system with lot size-dependent lead time L(Q). An experimental study is conducted, and results are provided to assess the developed model. Results show that the optimized Q and r for different distributions of daily demand are not the same even if the associated total inventory costs are close to each other.

scholarly journals Optimal Pricing and Ordering Policy for Two Echelon Varying Production Inventory System

2014 ◽  
Vol 2014 ◽  
pp. 1-11 ◽  
Author(s):  
Brojeswar Pal ◽  
Shib Sankar Sana ◽  
Kripasindhu Chaudhuri
Keyword(s):  
Supply Chain ◽  
Raw Materials ◽  
Chain Model ◽  
Selling Price ◽  
Lot Size ◽  
Ordering Policy ◽  
Supply Chain Model ◽  
Production Inventory ◽  
Test Feasibility ◽  
Optimal Ordering

The paper proposes a two-stage supply chain model for price sensitive demand in imperfect production system while manufacturer and supplier are the members of the chain. The supplier screens the raw materials first and supplies good materials to the manufacturer at a constant rate. The production rate varies randomly within a finite interval. The inventory cycle of the manufacturer starts with shortages and production and it finishes with shortages again, in which shortages are partially backlogged. We consider a mixture of LIFO (last in, first out) and FIFO (first in, first out) dispatching policies to fill the backlogged demand. Thus, the objective of the proposed paper is to determine the optimal ordering lot-size and selling price of the manufacturer such that the per unit average integrated expected profit of the supply chain model is maximized. A numerical example is provided to analyze and illustrate the behavior and application of the model. Finally, sensitivity analysis of the key parameters are presented to test feasibility of the model.

scholarly journals Joint lot sizing and scheduling of a multi-product multi-period supply chain

2019 ◽  
Vol 10 (5) ◽  
pp. 1516
Author(s):  
Ahmed Othman El-meehy ◽  
Amin K. El-Kharbotly ◽  
Mohammed M. El-Beheiry
Keyword(s):  
Supply Chain ◽  
Lot Sizing ◽  
Raw Materials ◽  
Supply Chain Design ◽  
Raw Material ◽  
Design Parameters ◽  
Distribution Centers ◽  
Lot Size ◽  
Holding Cost ◽  
Lot Sizing And Scheduling

The joint lot sizing and scheduling problem can be considered as an evolvement of the joint economic lot size problem which has drawn researchers’ interests for decades. The objective of this paper is to find the effect of a capacitated multi-period supply chain design parameters on joint lot sizing and scheduling decisions for different holding and penalty costs. The supply chain deals with two raw materials suppliers. The production facility produces two products which are shipped to customers through distribution centers. A mathematical model is developed to determine optimum quantities of purchased raw materials, production schedule (MPS), delivered quantities and raw material and products inventory for predetermined number of periods. The model is solved to maximize total supply chain profits. Results showed that at high capacity and low holding cost, the supply chain tends to produce only one product each period, for limited capacity and high value of holding cost, the supply chain may produce the two products together each period.

scholarly journals Rolling Supply Chain Scheduling considering Suppliers, Production, and Delivery Lot-Size

2018 ◽  
Vol 2018 ◽  
pp. 1-14
Author(s):  
Rong-Hwa Huang ◽  
Tung-Han Yu ◽  
Chen-Yun Lee
Keyword(s):  
Supply Chain ◽  
Supply Chain Management ◽  
Simulated Data ◽  
Planning Horizon ◽  
Scheduling Problems ◽  
Supply Chain Scheduling ◽  
Lot Size ◽  
Delivery Cost ◽  
Chain Management ◽  
Rolling Planning

Supply chain management and integration play a key factor in contemporary manufacturing concept. Companies seek to integrate itself within a cooperative and mutual benefiting supply chain. Supply chain scheduling, as an important aspect of supply chain management, highly emphasizes on minimizing stock costs and delivery costs. Most previous researches on supply chain scheduling problems assume make-to-order production, which includes delivery cost in lot-size. This practice simplifies the complexity of the problem. Instead, this research discusses make-to-contract production, where the supply chain has a rolling planning horizon that changes according to contracts. Within a planning horizon, two types of interval are defined. The first is frozen interval, in which the manufacturing decision cannot be changed. The second is free interval, where schedules can be adjusted depending on new contracts. This research aims to build a robust rolling supply management schedule to satisfy customers’ needs, by considering supplier, production, and delivery lot-size simultaneously. The objective is to effectively decide a combination of supplier, production, and delivery lot-size that minimizes total cost consisting of supplier cost, finish good stock cost, and delivery cost. Based on the concept, this study designs a problem-solving process that combines the methods of rolling planning horizon and genetic algorithm. Delivery size (DS), finish good stock (FS), and early delivery cost (ED) are the three methods applied; each will provide a guideline to produce a feasible solution. By further considering the fluctuations in practical needs and performing an overall evaluation, a robust and optimal supply chain scheduling plan can be decided, including the optimal lot-sizes of supplier, production, and delivery. In the effectiveness test which considers 3 types of customer demands and 11 types of company cost structures, the simulated data test results suggest that the proposed methods in this study have excellent performance.

scholarly journals Improving Supply Chain Profit through Reverse Factoring: A New Multi-Suppliers Single-Vendor Joint Economic Lot Size Model

2020 ◽  
Vol 8 (2) ◽  
pp. 23
Author(s):  
Beatrice Marchi ◽  
Simone Zanoni ◽  
Mohamad Y. Jaber
Keyword(s):  
Supply Chain ◽  
Financial Institution ◽  
Theory And Practice ◽  
Lot Size ◽  
Accounts Receivable ◽  
Financial Decisions ◽  
Supply Chain Finance ◽  
Joint Economic Lot Size ◽  
Supply Chain Financing ◽  
Size Model

Supply chain finance has been gaining attention in theory and practice. A company’s financial position affects its performance and survivability in dynamic and volatile markets. Those that have weak financial performance are vulnerable when operating in environments that are uncertain and financially unstable. Companies adopt various solutions and techniques to manage, effectively and efficiently, the flow of money to and from its suppliers and buyers. Reverse factoring is an innovative technique in supply chain financing. This paper develops a joint economic lot size model where a vendor coordinates operational and financial decisions with its multiple suppliers through the establishment of a reverse factoring arrangement. The creditworthy vendor systematically informs a financial institution (e.g., bank) of payment obligations to selected suppliers, enabling the latter to borrow against the value of the relevant accounts receivable at low interest (borrowing) rates. The paper also presents a numerical example and a sensitivity analysis to illustrate the behavior of the model and to compare the economic and operational performance of a supply chain with and without a reverse factoring agreement. The results show that the establishment of a reverse factoring agreement within the supply chain improves the economic performance and impacts on the operational decisions.

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