integrated multi item production inventory systems abstract we study an integrated multi item production inventory system with stochastic demands and capacitated production the problem is to find the base stock levels which minimize expected inventory costs per unit time for an infinite time horizon when unit manufacturing times are deterministic or exponentially distributed we derive analytical expressions that lead to the optimal base stock levels our results provide several implications about the interaction of inventories capacity utilization and variation in the production environment

a framework of economic analysis for tapered technology manufacturing alliances abstract globalization of production has altered the configuration of supply chains in many industries besides outsourcing joint ventures and strategic alliances are increasingly established to create competitive production organizations this paper addresses a case of tapered technology manufacturing alliance between a process technology firm with captive manufacturing capability and an efficient manufacturing firm in an asset heavy industry a framework of economic analysis is first developed for fusing the factors of technology licensing manufacturing efficiency risk sharing and demand uncertainty analysis methods of capacity economics are next described for participation analysis capacity allocation and contract term tradeoffs finally we demonstrate the utility of the methods by numerical examples with stylized industry data and by an analysis of alliance stability when facing potential new entrants

the single vendor single buyer integrated production inventory model with a generalised policy abstract this note considers a more general type of policy for the single vendor single buyer integrated production inventory model than has hitherto been presented based on successive shipments to the buyer within a single production batch increasing by a fixed factor

temporal aggregation and svar identification with an application to fiscal policy abstract we show how to assess identifying assumptions for a low frequency svar using estimates from a higher frequency model in our application quarterly data support identified annual svars in government spending and output by assuming zero within year impact of output on spending

a joint economic lot size model with financial collaboration and uncertain investment opportunity establishing long term relationships among the members of a supply chain has become necessary to enhance the supply chain s competitiveness in a globalized environment besides coordinating operational decisions such as how much and when to produce or to order the members of a supply chain may also share financial resources or act jointly on the capital market this is important especially when companies have unequal access to capital for example because they are located in countries with different economic conditions and banking policies and or they have different credit ratings the joint financing of investments across the supply chain may thus ensure the stability of production and of the flow of products to the customers in addition it strengthens the established relationships among the supply chain members the paper at hand takes up these issues and presents a joint economic lot size model that allows investments financed cooperatively by the members of the supply chain in particular it considers a two stage single vendor single buyer supply chain and assumes that the vendor has the option to invest in increasing its production rate the outcome of these attempts to improve production capabilities however is uncertain and subject to an investment success probability due to different access to capital the vendor and the buyer may also share the investment and the outcome uncertainty which can be beneficial to both parties

the optimal acquisition of automation to enhance the productivity of labor decisions concerning the mix of automation and labor employed by an organization are embedded in the long term strategic plan since the composition of productive capacity impacts on an organization s ability to survive and compete in this paper the optimal mix of automation and labor is identified for automation which acts to enhance the productivity of an organization s workforce the incentives considered for acquiring automation are increasing the level of output reducing the high cost of labor and compensating for a limited supply of labor factors explicitly examined by the model include the future long term goal level of output costs associated with maintaining the workforce wages and automation and costs associated with changing the levels of workforce and automation since the formulation is dynamic so that all exogenous and decision variables may be expressed as functions of time the effects of technological improvement increasing wage rates changing labor supply and diminishing retur

coordination and profit sharing between a manufacturer and a buyer with target profit under credit option several studies have focused on buyer vendor coordination through quantity discount credit option mechanism but few quantitative models and investigations are available that have explored the mechanism for transfer of surplus generated due to coordination in this paper we develop a coordination mechanism through credit option such that both the parties can divide the surplus equitably after satisfying their own profit targets two situations are explored here in the first situation both the parties have no individual profit target from the business whereas in the second situation there are individual profit target for both the parties the proposed mechanism for division of surplus is studied through a numerical study and the impact of different parameter values on the results are examined

information distortion in a supply chain the bullwhip effect this article originally appeared in management science april 1997 volume 43 number 4 pp 546 558 published by the institute of management sciences consider a series of companies in a supply chain each of whom orders from its immediate upstream member in this setting inbound orders from a downstream member serve as a valuable informational input to upstream production and inventory decisions this paper claims that the information transferred in the form of orders tends to be distorted and can misguide upstream members in their inventory and production decisions in particular the variance of orders may be larger than that of sales and distortion tends to increase as one moves upstream a phenomenon termed bullwhip effect this paper analyzes four sources of the bullwhip effect demand signal processing rationing game order batching and price variations actions that can be taken to mitigate the detrimental impact of this distortion are also discussed

models for multi plant coordination abstract this paper addresses coordination of production planning among multiple plants in a vertically integrated firm currently there is no unified body of literature that deals with this issue we identify important issues that managers and researchers must address so that production and inventory decisions can be determined for all plants in a manner optimal for the organization as a whole

a two period supply contract model for a decentralized assembly system abstract supply contract helps in coordinating the supply of quantities from different suppliers in order to meet the demand for a product in this paper supply contract models are developed by considering an assembly system operated under a centralized and a decentralized control modes the centralized control mode considers a single decision maker and offers a global optimal solution however the decentralized control mode considers each player in the contract as a decision maker and offers local optimal solutions based on the production and cost characteristics of each player such local optimal solutions are adjusted through coordinating parameters to obtain global optimal solutions if a contract developed for a decentralized control mode achieves the global optimal solution then the supply chain or channel is said to be coordinated we examine supply contract scenarios by developing a two period contract model for a two echelon assembly system we show that contract operating under a decentralized control mode can be coordinated by adjusting both wholesale and buyback prices a numerical study is also presented to illustrate the applicability of the proposed contract model

manufacturer s return policies and retail competition manufacturers returns policies are a common feature in the distribution of many products the obvious rationale for returns policies is insurance practitioners not surprisingly have a different perspective and view returns as a cost of doing business in this paper we study the strategic effect of returns policies on retail competition and highlight its profitability implications for a manufacturer the setting for our research is the distribution of products with uncertain demand limited shelf lives and retail competition our objective is to provide a better understanding of when manufacturers should adopt returns policies the insights are obtained with a model based on the economics of strategy and decision making under uncertainty we show that when retailing is competitive and there is no uncertainty in demand a returns policy subtly induces retailers to compete more intensely the provision of a returns policy reduces retail prices without affecting wholesale prices thereby reducing retailer margins and improving manufacturer profitability the intuition is that with a returns policy cournot like levels of retail stocks cannot be sustained each retailer will order stocks so that it will not be constrained by stocks and so intensifying retail competition when however demand is uncertain and there is a single retailer a returns policy encourages the retailer to over stock and so decreases upstream manufacturer profits while the provision of a returns policy leads to lower retail margins the optimality of returns policy depends on the overall uncertainty and marginal cost a returns policy reduces the dispersion in retail prices between the high and low states of demand and the range of retail prices in the returns case is contained within the range of retail prices for the no returns case in the general setting when there are competing retailers and demand is uncertain there is a trade off for the manufacturer between the benefits more intense retail competition and the costs excessive stocking of a returns policy we find that a manufacturer should accept returns when the marginal production cost is sufficiently low and demand uncertainty is not too great to validate the results of our theory we conduct an empirical test with data from a major u s retailer the tests confirm our prediction that a returns policy intensifies retail competition and reduces retailer margins our theory and empirical test should interest practitioners and researchers in distribution especially those concerned with managing retail competition

coordinated supply chain management abstract historically the three fundamental stages of the supply chain procurement production and distribution have been managed independently buffered by large inventories increasing competitive pressures and market globalization are forcing firms to develop supply chains that can quickly respond to customer needs to remain competitive these firms must reduce operating costs while continuously improving customer service with recent advances in communications and information technology as well as a rapidly growing array of logistics options firms have an opportunity to reduce operating costs by coordinating the planning of these stages in this paper we review the literature addressing coordinated planning between two or more stages of the supply chain placing particular emphasis on models that would lend themselves to a total supply chain model finally we suggest directions for future research

an empirical study on coalition formation and cost savings allocation abstract interest has been raised by the recent identification of potential savings through collaborative planning in logistics operations even though substantial savings can be realized two key questions exist i how should potential savings be divided among a group of collaborating companies and ii among potential collaborating companies how should collaborating group s be formed these two questions are studied in a specific context among potential collaborating companies a subset denoted the leading companies performs collaborative planning on behalf of the others and together they initiate formation of a collaborating group we use the concept of a business model to detail such context based on the literature on network formation where potential savings are modelled by a cooperative game four business models are explored in four different subsets of leading companies we propose a network model as a method to determine the stable collaborating group in each computation a case study including eight forest companies is described and analyzed results show that very different solution characteristics can be achieved depending on the business model selected

the impact of information enrichment on the bullwhip effect in supply chains a control engineering perspective this paper examines the beneficial impact of information sharing in multi echelon supply chains we compare a traditional supply chain in which only the first stage in the chain observes end consumer demand and upstream stages have to base their forecasts on incoming orders with an information enriched supply chain where customer demand data e g epos data is shared throughout the chain two types of replenishment rules are analysed order up to out policies and smoothing policies policies used to reduce or dampen variability in the demand for the class of out policies we will show that information sharing helps to reduce the bullwhipeffect variance amplification of ordering quantities in supply chains significantly especially at higher levels in the chain however the bullwhip problem is not completely eliminated and it still increases as one moves up the chain for the smoothing policies we show that information sharing is necessary to reduce order variance at higher levels of the chain the methodology is based on control systems engineering and allows us to gain valuable insights into the dynamic behaviour of supply chain replenishment rules we also introduce acontrolengineering based measure to quantify the variance amplification bullwhip or variance reduction

improving buyer seller system cooperation through inventory control abstract much of the literature pertaining to inventory control systems assumes a perfectly competitive market in which increases or decreases in the buyer s purchase costs affect neither the final retail price nor consumer demand this paper attempts to contribute results to the more recent literature characterized by the buyer seller in a monopolistic market the focus is on issues and advantages of improving buyer seller cooperation in an inventory control system two inventory models are structured in a game framework in the first model a noncooperative relationship transaction is assumed in which the seller as the leader makes the first decision and then the buyer as the follower makes its decision the unique equilibrium of the game is obtained and found to coincide with the classical eoq result in the second model the leader follower relationship is relaxed and a scenario is examined in which the seller and the buyer cooperatively maximize their joint system profit comparison of the two models reveals that 1 a the total system profit is higher at cooperation than at noncooperation 2 b the optimal order quantity of the buyer is higher at cooperation than at noncooperation 3 c the wholesale price of the seller to the buyer is lower at cooperation than at noncooperation it is also demonstrated that a quantity discount approach is an effective mechanism for achieving system cooperation

sub supply chain coordination in a three layer chain under demand uncertainty and random yield in production abstract one of the major objectives of modern supply chain management is to deal with the growing decentralization among the involved entities and hence minimizing the double marginalization effect inside the chain especially when the end customers demand is not deterministic to address this a three layer supply chain with one raw material supplier one manufacturer and one retailer is developed and studied in this paper effects of both supply chain coordination as well as sub supply chain coordination are examined optimal order and production quantities are obtained for the centralized system which depicts the scenario under coordination optimal order quantities and expected profits of the individual channel actors are maximized locally in the decentralized system under commonly used price only contract semi integrated models are also studied under price only contract the optimal strategies under different power structures are compared and the effects of the channel parameters on the optimal strategies are also examined numerical example is given to illustrate the developed model

a one vendor multi buyer integrated inventory model abstract we consider a one vendor multi buyer integrated inventory model the vendor seeks to minimize his total annual cost subject to the maximum costs which buyers are prepared to incur in order to implement this model the vendor only needs to know buyer s annual demand and previous order frequency which can be inferred from buyer s past ordering behavior we find the optimal solution for the one vendor one buyer case and present a heuristic approach for the one vendor multi buyer case

a single vendor single manufacturer integrated inventory model with stochastic demand and variable production rate abstract this paper investigates an alternative way to react to demand uncertainty in an integrated inventory model namely the variation of the production rate that enables the manufacturer to reduce lead times and the corresponding demand uncertainty to investigate the impact of variable production rates on the supply chain this paper considers a single vendor single manufacturer integrated inventory model where the vendor ships finished products in multiples of full truckloads to the manufacturer the objective of the model is to coordinate both production and distribution of the product in such a way that the total costs of the supply chain are minimized a solution procedure is suggested and the behaviour of the model is analysed in numerical examples obviously the total supply chain cost is reduced when the manufacturer s production rate is included as a decision variable in the model these savings can generally benefit both the vendor and the manufacturer however in situations where coordinated decision making is initially not beneficial to the vendor the supply chain members can benefit from a revenue sharing contract that supports the sharing of the total savings the model proposed in the paper at hand supports both the determination of an optimal production rate as well as the distribution of coordination benefits among the supply chain members

supplier integration green sustainability programs and financial performance of fashion enterprises under global financial crisis abstract fashion business is sensitive to economic situations and supplier integration si and green sustainability programs gsp are two timely issues in the fashion industry undoubtedly both si and gsp require significant resources and continuous commitment which affect cash flows and resource allocation of the fashion enterprises how si and gsp affect the financial performance of the fashion enterprises under the global financial crisis is hence an important issue motivated by the above relationship and based on publicly available data this study aims to explore empirically i the impact of si and gsp adoption on the financial performance of fashion enterprises ii the ability of si and gsp adoption to alleviate adversity owing to financial crisis and iii the moderating effect brought by fashion content on the above relationships the findings reveal that i both si and gsp adoption can significantly improve the financial performance of the fashion enterprises ii both si and gsp adoption help to mitigate the adverse effect of financial tsunami on the fashion enterprise s financial performance and iii fashion content has a moderating effect for fashion enterprises which sell fashionable items i e fashionable group to increase profits through a higher level of si or executing gsp to act against financial tsunami managerial implications and insights are discussed

the quantity flexibility contract and supplier customer incentives consider a supply chain consisting of two independent agents a supplier e g a manufacturer and its customer e g a retailer the latter in turn serving an uncertain market demand to reconcile manufacturing procurement time lags with a need for timely response to the market such supply chains often must commit resources to production quantities based on forecasted rather than realized demand the customer typically provides a planning forecast of its intended purchase which does not entail commitment benefiting from overproduction while not bearing the immediate costs the customer has incentive to initially overforecast before eventually purchasing a lesser quantity the supplier must in turn anticipate such behavior in its production quantity decision this individually rational behavior results in an inefficient supply chain this paper models the incentives of the two parties identifying causes of inefficiency and suggesting remedies particular attention is given to the quantity flexibility qf contract which couples the customer s commitment to purchase no less than a certain percentage below the forecast with the supplier s guarantee to deliver up to a certain percentage above under certain conditions this method can allocate the costs of market demand uncertainty so as to lead the individually motivated supplier and customer to the systemwide optimal outcome we characterize the implications of qf contracts for the behavior and performance of both parties and the supply chain as a whole

supply chain coordination perspectives empirical studies and research directions supply chains sc are generally complex and are characterized by numerous activities spread over multiple functions and organizations which pose interesting challenges for effective sc coordination to meet these challenges sc members must work towards a unified system and coordinate with each other a systematic literature review is presented in this paper to throw light on the importance of sc coordination the objectives of this paper are to report and review various perspectives on sc coordination issues understand and appreciate various mechanisms available for coordination and identify the gaps existing in the literature a framework is suggested indicating scope for further research

computing core allocations in cooperative games with an application to cooperative procurement abstract cooperative game theory defines several concepts for distributing outcome shares in a cooperative game with transferable utilities one of the most famous solution concepts is the core which defines a set of outcome allocations that are stable such that no coalition has an incentive to leave the grand coalition in this paper we propose a general procedure to compute a core element or to detect that no core allocation exists which is based on mathematical programming techniques the procedure proposed in this paper can be applied to a wide class of cooperative games where the characteristic function is given by the optimum objective function value of a complex optimization problem for cooperative procurement which is an example from the field of supply chain management where some literature on the core concept already exists we prove the applicability and provide computational results to demonstrate that games with 150 players can be handled

a serial supply chain of newsvendor problem with safety stocks under complete and partial information sharing abstract we consider a supply chain where multiple members are serially connected the decision is to determine the ordering quantity of a member to the next upstream member in the supply chain the basic cost model is similar to the newsvendor problem with additional consideration to safety stock this paper presents optimal approaches for coordination of the supply chain under both complete and partial information sharing in order to maximize the total expected benefit for complete information sharing we develop an optimal coordination algorithm for partial information sharing we propose an optimal coordination algorithm based on the alternating direction method and the diagonal quadratic approximation method a numerical example is discussed to show the optimal convergence of ordering quantities and discuss the properties of the proposed algorithms

cooperation and game theoretic cost allocation in stochastic inventory models with continuous review we study cooperation strategies for companies that continuously review their inventories and face poisson demand our main goal is to analyze stable cost allocations of the joint costs these are such that any group of companies has lower costs than the individual companies if such allocations exist they provide an incentive for the companies to cooperate we consider two natural cooperation strategies i the companies jointly place an order for replenishment if their joint inventory position reaches a certain reorder level and ii the companies reorder as soon as one of them reaches its reorder level numerical experiments for two companies show that the second strategy has the lowest joint costs under this strategy the game theoretical shapley value and the distribution rule a cost allocation in which the companies share the procurement cost and each pays its own holding cost are shown to be stable cost allocations these results also hold for situations with three companies