a b s t r a c tThis paper studies coordination in a three-echelon supply chain and examines the impact of sub-supply chain coordination (sub-coordination). Our analysis is based on the price-only contracts that are commonly used in practice. The model is of the newsvendor type. We consider the following cases: no coordination between any members of the supply chain (decentralized), coordination between only two members (sub-supply chain coordination) and coordination of the whole supply chain as a benchmark. We explicitly analyze the order quantity and contracting decisions for a decentralized three-echelon supply chain. We compare supply chain efficiency when there is upstream coordination and when there is downstream coordination and show that the former is more efficient than or as efficient as the latter. In our setting, the difference between upstream and downstream sub-supply chain coordination is equivalent to the shortage cost transfer. We find that both the supplier and the retailer would prefer to act alone rather than to coordinate with the manufacturer when sub-supply chain coordination is suggested. This contradiction may partly explain the popularity of price-only contracts in practice.
Highlights• We develop our models for product development cost and sales revenues. • We explicitly model diffusion dynamics. • We provide analytical results for the optimal frequency and parameter impacts. • For the extended model, we get a closed-form solution under special condition. • We prove the uniqueness of the optimal frequency under general conditions.
This paper studies the value of information on future price behaviour. We consider a one-period inventory modelling framework with random period length and two order opportunities. The selling price is determined dynamically and the demand is price-sensitive. The second ordering-pricing decision reflects the updated information on future price behaviour on supply chain flexibility. We consider three models with different levels of flexibility: the static model, the quantity flexible model and the combined quantity and timing (fully) flexible model. We compare between the values of three different features in the supply chain: updated information on price behaviour, dynamic pricing and supply flexibility. And we demonstrate the effect of holding cost and demand uncertainty on these three values. We also consider a specific condition with fixed selling prices. We give explicit analysis on the optimal order decisions, and analytically show the impact of information and quantity flexibility on the optimal order decisions.
Global production networks are highly complex to manage and constantly to optimize. Recent developments such as political power changes, pandemic crises or increasing trade hurdles have significantly altered the risk exposure of global production set-ups. We use optimization and simulation tools to derive a suitable network type. We develop a global cross-shipping strategy with an integrated approach combining heuristics and simulation. We quantify the impacts of different uncertainties, such as plant closure and high demand variation with simulation, and it to compare to a local-to-local production network. Our approach makes the model easy to implement and close to real-world processes. This paper provides support for production network decision-making. We present a scientifically sound and practically feasible approach to an important actual business management problem. The developed integrated approach does not require assumptions about the production network structure or policies and is therefore applicable to a wide range of settings. In our case study, we quantify the positive impact of a global cross-shipping production network in comparison to a local-to-local approach. The result of our study helps to adjust the needed strategic and operational measures to manage a global production network.
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