Tactic of Supply Chain Coordination when the Freight Cost of Unit Product is Sensitive to Lot Size

2012 ◽  
Vol 601 ◽  
pp. 593-598 ◽  
Author(s):  
Hua Ming Gui
Keyword(s):  
Supply Chain ◽  
Lead Time ◽  
Supply Chain Coordination ◽  
Optimal Order ◽  
Optimal Size ◽  
Lot Size ◽  
Optimal Production ◽  
Decentralized Supply Chain ◽  
Product Delivery ◽  
Analytical Result

Considering a supply chain with a manufacturer and a wholesaler, we assume the freight cost of unit product is sensitive to lot size and the manufacturer is responsible for product delivery, the optimal lot size models under decentralized decision and centralized supply chain are presented. The analytical result shows that the more flexible the delivery capacity is, the smaller the optimal production size is, which is consistent with short order lead time and small lot size that claimed by the wholesaler. Therefore, the manufacturer can quickly respond to demand of the wholesaler under the condition that the total cost is invariable. Moreover, when the delivery capacity isn’t absolute flexibility, the manufacturer may motivate the wholesaler to undertake product delivery through reducing the transfer price so that the wholesaler’s optimal order size under decentralized supply chain is closer to both the manufacturer’s optimal production size and the entire supply chain’s optimal size under centralized supply chain, which may benefit the entire supply chain since both can obtain a win-win solution.

scholarly journals Research on the Fresh Agricultural Product Supply Chain Coordination with Supply Disruptions

2013 ◽  
Vol 2013 ◽  
pp. 1-9 ◽  
Author(s):  
Sun Guohua
Keyword(s):  
Supply Chain ◽  
Supply Chain Coordination ◽  
Wholesale Price ◽  
Planning Horizon ◽  
Optimal Order ◽  
Agricultural Product ◽  
Supply Disruptions ◽  
Decentralized Supply Chain ◽  
Lump Sum ◽  
Coordination Contract

This paper develops a dynamic model in a one-supplier-one-retailer fresh agricultural product supply chain that experiences supply disruptions during the planning horizon. The optimal solutions in the centralized and decentralized supply chains are studied. It is found that the retailer’s optimal order quantity and the maximum total supply chain profit in the decentralized supply chain with wholesale price contract are less than that in the centralized supply chain. A two-part tariff contract is proposed to coordinate the decentralized supply chain with which the maximum profit can be achieved. It is found that the optimal wholesale price should be a decreasing piecewise function of the final output. To ensure that the supplier and the retailer both have incentives to accept the coordination contract, a lump-sum fee is offered. The interval of lump-sum fee is given leaving both the supplier and the retailer better off with the two-part tariff contract.

SUPPLY CHAIN COORDINATION WITH UNCERTAINTY IN TWO-ECHELON YIELDS

2013 ◽  
Vol 30 (01) ◽  
pp. 1250044 ◽  
Author(s):  
HONGJUN PENG ◽  
MEIHUA ZHOU ◽  
LING QIAN
Keyword(s):  
Supply Chain ◽  
Risk Sharing ◽  
Supply Chain Coordination ◽  
Revenue Sharing ◽  
Optimal Order ◽  
Optimal Production ◽  
Numerical Examples ◽  
Advantages And Disadvantages ◽  
Profit Value ◽  
Production Decision

This paper researches the coordination models in the supply chain where there are uncertain two-echelon yields and random demand. We analyzed three contracts of revenue sharing (RS), overproduction risk sharing (OS), and combination of RS and OS (RO), and contrasted them with uncoordinated model. We studied the optimal order decision for downstream manufacturer and the optimal production decision for upstream manufacturer. Numerical examples were presented to illustrate the results. The study showed that the RS contract and OS sharing contract both have their advantages and disadvantages and the RO contract could benefit the whole supply chain best. We found out that the OS contract gives the upstream manufacturer incentive to produce more so as to maximize the profit value, but the upstream manufacturer may receive less as the price of overproduced part increases. We also found out that under most scenarios, the supply chain benefits from the yields and demand risks reduction and generates a higher profit. But sometimes in the OS contract the downstream manufacturer profit can increase as yields randomness increases. And, in the uncoordinated case and OS contract, the upstream manufacturer profit can increase as demand randomness increases.

scholarly journals Supply Chain Coordination with a Loss-Averse Retailer and Combined Contract

Mathematics ◽  
2020 ◽  
Vol 8 (4) ◽  
pp. 586
Author(s):  
Wei Liu ◽  
Shiji Song ◽  
Ying Qiao ◽  
Han Zhao
Keyword(s):  
Supply Chain ◽  
Loss Aversion ◽  
Value At Risk ◽  
Supply Chain Coordination ◽  
Wholesale Price ◽  
Conditional Value At Risk ◽  
Optimal Order ◽  
Confidence Levels ◽  
Quantity Flexibility ◽  
Quantity Flexibility Contract

This paper studies the supply chain coordination where the retailer is loss-averse, and a combined buyback and quantity flexibility contract is introduced. The loss-averse retailer’s objective is to maximize the Conditional Value-at-Risk of utility. It is shown the combined contract can coordinate the chain and a unique coordinating wholesale price exists if the confidence level is below a threshold. Moreover, the retailer’s optimal order quantity, expected utility and coordinating wholesale price are decreasing in loss aversion and confidence levels, respectively. We also find that when the contract parameters are restricted, the combined contract may coordinate the supply chain even though neither of its component contracts coordinate the chain.

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 Supply Chain Decisions and Coordination under the Combined Effect of Overconfidence and Fairness Concern

Complexity ◽  
2020 ◽  
Vol 2020 ◽  
pp. 1-16
Author(s):  
Zhang Zhijian ◽  
Peng Wang ◽  
Miyu Wan ◽  
Junhua Guo ◽  
Jian Liu
Keyword(s):  
Supply Chain ◽  
Stackelberg Game ◽  
Supply Chain Coordination ◽  
Joint Effect ◽  
Optimal Order ◽  
Chain Model ◽  
Order Quantity ◽  
Supply Chain Model ◽  
Fairness Concerns ◽  
Fairness Concern

The purpose of this study was to examine the joint effect of overconfidence and fairness concern on supply chain decisions and design contracts to achieve a win-win situation within the supply chain. For this study, a centralized supply chain model was established without considering the retailers’ overconfidence and fairness concern. Furthermore, the retailers’ overconfidence and fairness concerns were introduced into the decentralized supply chain, while the Stackelberg game model between the manufacturer and the retailer was built. Furthermore, an innovative supply chain contract, i.e., buyback contract, with promotional cost sharing was designed to achieve supply chain coordination along with overconfidence and fairness concern. Finally, a numerical analysis was also conducted to analyze the effect of overconfidence, fairness concern, and the validity of the contract. The principal findings of the study include the positive correlation between retailers’ overconfidence and optimal order quantity, sales effort, expected utility, and profit. Although the order quantity and sales efforts were not affected by the fairness concern of the retailer, the contract achieved coordination with a win-win outcome when the level of overconfidence and fairness concern was moderate.

Supply Chain Coordination under Asymmetric Disruptive Demand

2010 ◽  
Vol 44-47 ◽  
pp. 96-100
Author(s):  
Chuan Bo Zhu
Keyword(s):  
Supply Chain ◽  
Supply Chain Coordination ◽  
Wholesale Price ◽  
Decentralized Supply Chain ◽  
Optimal Capacity ◽  
Capacity Reservation ◽  
Chain Operation ◽  
Baseline Case ◽  
Supply Chain Operation ◽  
Better Than

Under the circumstance of disruptive demand, the decision-making and coordination of enterprise’s capacity is directly related to the efficiency of supply chain operation. On the basis of the baseline case, capacity reservation contract sees that the performance of decentralized supply chain is equal to the centralized supply chain, and better than the level of the optimal supply chain capacity under the wholesale price contract. For disruptive demand, this paper discusses the conditions of capacity expansion and supply chain coordination through the capacity reservation contract in two cases, i.e., symmetric disruptive information, asymmetric disruptive information, and compares the optimal capacity and the corresponding profit.

A Multi-Retailer Decentralized Supply Chain Coordination Based on Revenue-Sharing Contracts

2014 ◽  
Vol 668-669 ◽  
pp. 1587-1590
Author(s):  
Jin Yu Ren ◽  
Yong Xian Liu ◽  
Peng Fei Zeng
Keyword(s):  
Supply Chain ◽  
Supply Chain Coordination ◽  
Revenue Sharing ◽  
Profit Sharing ◽  
Optimal Solutions ◽  
Supply Chain System ◽  
Chain System ◽  
Numerical Example ◽  
Coordination Model ◽  
Decentralized Supply Chain

To a decentralized supply chain system consisting of a manufacturer and multiple independent retailers, the game models about the decentralized solution and centralized solution are developed. Comparison of the optimal solutions to two models reveals that the supply chain needs coordination. Then a coordination model on the revenue-sharing contracts is introduced. Finally, a numerical example shows that the perfect supply chain coordination and the flexible allocation of the profit can be achieved when a complementary profit-sharing agreement is included.

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