N ew developments in corporate information technology such as enterprise resource planning systems have significantly increased the flow of information among members of supply chains. However, the benefits of sharing information can vary depending on the supply chain structure and its operational characteristics. Most of the existing research has studied the impact of sharing downstream information (e.g., a manufacturer sharing information with its suppliers). We evaluate the benefits of sharing upstream yield information (e.g., a supplier sharing information with the manufacturer) in a two-stage serial supply chain in which the supplier has multiple internal processes and is faced with uncertain output due to yield losses. We are interested in determining when the sharing of the supplier's information is most beneficial to the manufacturer. After proposing an orderup-to type heuristic policy, we perform a detailed computational study and observe that this information is most beneficial when the supplier's yield variance is high and when end-customer demand variance is low. We also find that the manufacturer's backorder-to-holding cost ratio has little, if any, impact on the usefulness of information.
Product line management involves product expansion or elimination depending on various factors, for example, production processes and demands in the market. This study focuses on measuring product performance for a firm's product line management, using parametric and non-parametric approaches. First, we choose variables related to the production and demand of products and assess the comparative performance of product groups and individual products using data envelopment analysis (DEA). Second, we attempt to detect possible performance differences among the product groups using one-way analysis of variance. Third, we identify the sources of inefficiency using appropriate DEA scores and offer some managerial insights. Last, we try to confirm the determinants of product performance using Tobit regression analysis. The major contribution of this study is the use of a novel approach for product line management by measuring the performance of product groups and individual products using pertinent variables. The approach used in this study is applicable to various manufacturing and service industries. The limitations of this study are the number of product groups selected and examination of performance using cross-sectional data.
Purpose – Hospitals procure high volumes of medical supplies through large distributors in order to leverage economies of scale. However, when shortages hit, hospitals incur high penalty costs by purchasing from secondary markets. In this paper, the authors counter the hospital's typical purchasing strategy that a collaborative relationship with a large, Tier I medical supply distributor is beneficial under all conditions. The paper finds that during shortages the more beneficial strategy is for the hospital to add a medium-sized, Tier II distributor who offers a transactional relationship and is willing to provide a “preferred allocation” in return for a pre-committed annual purchase contract. The paper aims to discuss these issues. Design/methodology/approach – The authors assume availability of order volume to be a stochastic process and formulate the problem as a two-stage stochastic programming model, with optimal allocation in the second stage. The authors analyze the first-stage objective function using full-factorial numerical experimentation and perform a complete search for optimal volume mix. In addition, the model accounts for purchasing relationship, shortage cost, and varying price discount schedules. Findings – Under no shortage situation, hospitals purchase its entire order volume from Tier I distributor. However, during shortages, for any increase in preferred allocation from the Tier II distributor, hospitals purchase high volumes from the Tier II distributor except when preferred allocation and availability is high. The paper finds that the average cost savings for the use of preferred allocation is 16.14 percent. Originality/value – Existing purchasing literature focusses on the benefit of using single/multiple homogenous distributors under all conditions. In this paper, the authors examine the benefit of using non-homogenous distributors under conditions of shortage when one of them is willing to provide preferred allocation under varying price discount schedules.
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