Coordinating a multi-retailer decentralized distribution system with random demand based on buyback and compensation contracts

Ren, Jianhong; Xie, Hualong; Liu, Yonxiang; Zeng, Pengfei; Tao, Ze

doi:10.3926/jiem.1303

Cited by 2 publications

(3 citation statements)

References 16 publications

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“…The Newsboy problem is probably the simplest model of all stochastic inventory management problems, involving a single order decision and a stochastic sales outcome [30]. From the extant literature Jian et al [31], Wang et al [32], Groenendaal et al [33], Ren et al [34] and Wang et al [35], it is evidenced that this model has been improved on by many researchers over the years. Pando et al [36] argued that the newsboy model is probably the most studied stochastic inventory model in inventory control theory and with most extensions in recent years.…”

Section: Literature Reviewmentioning

confidence: 99%

Simulation Study of Collaborative Inventory Management for Seasonal Products by Incorporating Newsvendor and Buyback Contract

Fillie¹,

Arvitrida²,

Pujawan³

2019

Proceedings of the 2019 1st International Conference on Engineering and Management in Industrial System (ICOEMIS 2019)

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As supply chains become leaner, supply chain (SC) managers are often subjected to decrease inventory. Determining the appropriate inventory level for seasonal products without compromising the level of service provided to customers is crucial. This poses a challenge for supply chain managers to find the best trade-off between having excess or less inventory. A well-known model to determine such trade-offs is the newsvendor model. This model is focused on a decentralized business strategy. This research seeks to evaluate the contributions of collaborative inventory management for seasonal products with demand uncertainties having a single order in a cycle through newsvendor and buyback contract for a two-tier SC for both decentralized and centralized business strategies. To explore the effects of these uncertainties on seasonal products such as newspaper, apparels, perishable foods and major holiday products, a Monte Carlo simulation model was used to optimize the decision variable (the maximum order quantity, Q*) to improve the financial performance of the SC. The results indicate that wholesale price discount and buyback contract are efficient in collaborative inventory management. Buyback contract is less attractive when costs associated with returns are high. High return costs reduce the profitability of the SC significantly.

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Section: Literature Reviewmentioning

confidence: 99%

Simulation Study of Collaborative Inventory Management for Seasonal Products by Incorporating Newsvendor and Buyback Contract

Fillie¹,

Arvitrida²,

Pujawan³

2019

Proceedings of the 2019 1st International Conference on Engineering and Management in Industrial System (ICOEMIS 2019)

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“…Numerous literatures also study the supply chain coordination with return policies [5][6][7]. The effects of coordinating by supply chain contracts are different under different conditions, such as demand dependent on sales effort [8], multi-retailer [9,10], multi-channel [11], etc.…”

Section: Literature Reviewmentioning

confidence: 99%

“…The parameters above conform to the constraint, ≤ ≤ ≤ . We used to represent the retailer's degree of risk aversion caused by excess inventory, just like the loss aversion coefficient introduced by Schweitzer and Cachon to measure the retailer's degree of stockout risk aversion [10]. We assumed that ≥ 0.…”

Section: Assumptions and Notationsmentioning

confidence: 99%

Modelling Risk Coordination of Supply Chains with Put Option Contracts and Selective Return Policies

Yi¹,

Guo²

2015

Int. j. simul. model.

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To study risk coordination of supply chains, a two-echelon supply chain with one risk-neutral supplier and one risk-averse retailer is constructed, in which the retailer behaves with waste aversion. The retailer's conservative attitude to order results in poor performance of the supplier and the whole supply chain. A new contract which combines put options and selective return policies is developed. The retailer buys option contracts when he places an order, then decides to exercise part or all of them after the sales season so that he can choose the return quantity selectively. The exercise price is equivalent to the wholesale price of merchandise. The result demonstrates that this contract can coordinate the supply chain well and be carried out normally despite the retailer's risk preference being private because the supplier's pricing policy is independent of retailer's risk aversion. The numerical analysis shows that the retailer's expected utility outperforms that of the expected utility under the classical buyback contract.

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Coordinating a multi-retailer decentralized distribution system with random demand based on buyback and compensation contracts

Cited by 2 publications

References 16 publications

Simulation Study of Collaborative Inventory Management for Seasonal Products by Incorporating Newsvendor and Buyback Contract

Simulation Study of Collaborative Inventory Management for Seasonal Products by Incorporating Newsvendor and Buyback Contract

Modelling Risk Coordination of Supply Chains with Put Option Contracts and Selective Return Policies

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