Vertical cost information sharing in a supply chain with value-adding retailers

We consider a supply chain consisting of one supplier and two value-adding heterogeneous retailers. Each retailer has full knowledge about his own value-added cost structure that is unknown to the supplier and the other retailer. Assuming there is no horizontal information sharing between two retailers, we model the supply chain with a three-stage game-theoretic framework. In the first stage each retailer decides if he is willing to vertically disclose his private cost information to the supplier. In the second stage, given the information he has about the retailers, the supplier announces the wholesale price to the retailers. In response to the wholesale price, in the third stage, the retailers optimize their own retail prices and the values added to the product, respectively. Under certain conditions, we prove the existence of equilibrium prices and added values. Furthermore, we obtain the condition under which both retailers are unwilling to vertically share their private information with the supplier, as well as the conditions under which both retailers have incentives to reveal their cost information to the supplier, thus leading to a win–win situation for the whole supply chain.     

Implementing coordination contracts in a manufacturer Stackelberg dual-channel supply chain

We examine a manufacturer's pricing strategies in a dual-channel supply chain, in which the manufacturer is a Stackelberg leader and the retailer is a follower. We show the conditions under which the manufacturer and the retailer both prefer a dual-channel supply chain. We examine the coordination schemes for a dual-channel supply chain and find that a manufacturer's contract with a wholesale price and a price for the direct channel can coordinate the dual-channel supply channel, benefiting the retailer but not the manufacturer. We illustrate how such a contract with a complementary agreement, such as a two-part tariff or a profit-sharing agreement, can coordinate the dual-channel supply chain and enable both the manufacturer and the retailer to be a win-win.     

Coordinating a three level supply chain with flexible return policies

This paper studies the coordination issue of a three level supply chain selling short life cycle products in a single period model. The manufacturer first negotiates the trade contract with the retailer, then with the supplier. We construct the so-called flexible return policy by setting the rules of pricing while postponing the determination of the final contract prices. With return policies between each pair of adjacent firms, unsold products or used modules dissembled from the unsold products are returned level by level from the retailer to the upstream firms and each firm shares in the loss due to the overstock. We show that the three level supply chain can be fully coordinated with appropriate contracts and the total profit of the channel can be allocated with any specified ratios among the firms.     

Fresh-product supply chain management with logistics outsourcing

We consider a supply chain in which a producer supplies a fresh product, through a third-party logistics (3PL) provider, to a distant market where a distributor purchases and sells it to end customers. The product is perishable, both the quantity and quality of which may deteriorate during the process of transportation. The market demand is random, sensitive to the selling price as well as the freshness of the product. We derive the optimal decisions for the three supply chain members, including the 3PL provider's transportation fee, the producer's shipping quantity and wholesale price, and the distributor's purchasing quantity and retail price. We find that the presence of the 3PL provider in the supply chain has a significant impact on its performance. We propose an incentive scheme to coordinate the supply chain. The scheme consists of two contracts, including a wholesale-market clearance (WMC) contract between the producer and the distributor, and a wholesale-price-discount sharing (WDS) contract between the producer and the 3PL provider. We show that the proposed contracts can eliminate the two sources of “double marginalization” that exist in the three-tier supply chain, and induce the three parties to act in a coordinated way.     

Outsourcing vs. in-house production: a comparison of supply chain contracts with effort dependent demand

We analyze the effort and pricing decisions in a two facility supply chain in which one of the parties can exert costly effort to increase demand. We consider an outsourcing model in which the supplier makes the effort decision and an in-house production model in which the manufacturer decides on the effort level and we compare these two models with each other. We analyze and compare several contracts for decentralized supply chain models and we aim to find which contracts are best to use in different cases. We find the optimal contract parameters in each case and perform extensive computational testing to compare the efficiencies of these contracts. We also analyze the effect of the powers of the parties in the system and the effect of system parameters on the performances of the contracts and on the optimal values of the model variables such as price, effort and demand.     

A systematic approach for supply chain conflict detection with a hierarchical Petri Net extension

Coordinating and managing distributed entities in a supply chain is a challenging task due, in part, to conflicts present in such systems. If not handled effectively, the conflict can degrade the performance of the system as a whole due to the fact that each individual entity may be working towards goals that sub-optimize the integrated system. Therefore, the ability to discover conflicts would be a valuable asset, particularly if the discovery occurred proactively. This paper presents a methodology, extending the concept of basic Petri Nets, to discover supply chain conflict before they occur and cause detrimental effects to system performance. The approach involves linking hierarchical levels of the supply chain system and detecting conflicts occurring when the single entities, each optimized for it own operations, are combined together in a supply chain. These conflicts are not obvious or intuitive in examining the single entities of the supply chain, but when integrated the conflicts are discovered by the methodology. We applied the proposed methodology on a real-world supply chain to illustrate the validity of the tool. Although, further research is needed to fully explore this method of conflict detection, we believe that this research does indeed provide some much needed insight into the daunting task of conflict discovery and therefore proactive handling of these potentially negative occurrences in the supply chain.     

The value of VMI beyond information sharing in a single supplier multiple retailers supply chain under a non-stationary (Rn,Sn) policy

This study aims to determine the value of vendor-managed inventory (VMI) over independent decision making with information sharing (IS) under non-stationary stochastic demand with service-level constraints. For this purpose, we utilize mixed-integer linear programming formulations to quantify the benefits that can be accrued by a supplier, multiple retailers and the system as a whole by switching from IS to VMI. More specifically, we investigate the incremental value that VMI provides beyond IS in terms of expected cost savings, inventory reductions, and decrease in shipment sizes from the supplier to the retailers by conducting a large number of computational experiments. Results reveal that the decision transfer component of VMI improves these performance measures significantly when the supplier׳s setup cost is low and order issuing efficiency is high. The benefits offered by VMI are negligible under the problem settings where the supplier׳s order issuing efficiency is low and the production setup serves solely a single replenishment under IS.     

Eco-efficient supply chain networks: development of a design framework and application to a real case study

This paper presents a supply chain network design framework that is based on multi-objective mathematical programming and that can identify ‘eco-efficient’ configuration alternatives that are both efficient and ecologically sound. This work is original in that it encompasses the environmental impact of both transportation and warehousing activities. We apply the proposed framework to a real-life case study (i.e. Lindt & Sprüngli) for the distribution of chocolate products. The results show that cost-driven network optimisation may lead to beneficial effects for the environment and that a minor increase in distribution costs can be offset by a major improvement in environmental performance. This paper contributes to the body of knowledge on eco-efficient supply chain design and closes the missing link between model-based methods and empirical applied research. It also generates insights into the growing debate on the trade-off between the economic and environmental performance of supply chains, supporting organisations in the eco-efficient configuration of their supply chains.     

Impacts of demand uncertainty on retailer's dominance and manufacturer-retailer supply chain cooperation

Recent studies in marketing and distribution channels have shown that the balance of power between manufacturers and retailers is shifting. Based on this observation, we investigate a two-echelon supply chain with a manufacturer and a retailer in this paper. We first develop retailer-dominant non-cooperative game models by introducing a sensitivity of retailer's order quantity to manufacturer's wholesale price; then we analyze two cooperative scenarios, in which the Nash bargaining model is utilized to implement profit sharing between the manufacturer and the retailer. Under the assumption that the manufacturer and the retailer are risk-neutral, we find that the manufacturer and the retailer can bargain to cooperate at any level of retail-market demand uncertainty with exogenous retail price. However, the cooperation is conditional on retail-market demand uncertainty with endogenous retail price: it can be implemented if the fluctuation of retail-market demand is relatively small, and the measure of retail-market demand uncertainty does not exceed an upper bound. Theoretical and numerical analyses show that the retailer's dominance over the manufacturer increases with the increase in the sensitivity of retailer's order quantity to manufacturer's wholesale price under a limitation of retail-market demand uncertainty. Numerical analyses also show that the retailer's dominance decreases with the increase in retail-market demand uncertainty.     

On service degrade at a discount: Capacity, demand pooling, and optimal discounting

In this paper we study the capacity investment decisions and operational strategies of a firm providing two-class services facing uncertain demands. The capacity decisions of the resources are made before demands are observed. Each service can be implemented by its corresponding resource. Should a mismatch between the capacity and the actual demand for the services arise, the low-class resource can be used as a substitute for the high-class service. We introduce an operational strategy called degrade-at-a-discount, where a price discount is offered to motivate customers to accept a lower class service when their original choice is out of capacity. By formulating the problem as a one-period, two-stage stochastic problem, we analyze how to set up the optimal capacity and the optimal discount. We also conduct a comprehensive numerical study to show the benefits of the degrade-at-a-discount strategy.     

Information distortion in a supply chain and its mitigation using soft computing approach

The information transferred in the form of orders between the nodes of a supply chain tends to be distorted when it moves from downstream to upstream. This phenomenon is called as bullwhip effect and this research is aimed to analyze this effect deeply in a single input single output (SISO) model. A discrete time series SISO model is developed for the analysis and it proves to be very useful in revealing the dynamics characteristics of the system. The bullwhip effect is measured from the transfer function model and the effect can be reduced by applying soft computing approach. A detailed sensitivity analysis is carried out to investigate the behavior of the model under various conditions. The applied fuzzy logic theory controls the errors and change in errors associated with forecasted demand between the nodes of a supply chain and it allows a smooth information flow in the chain. Tuning of fuzzy logic controller has been performed using adaptive neuro-fuzzy inference system (ANFIS). The method is illustrated with a numerical example. The application of soft computing approach addresses the real situation of human judgment with fuzziness helps the managers to forecast the demand with less distortion and to improve the supply chain effectiveness.     

The closed-loop supply chain network with competition,distribution channel investment,and uncertainties

In this paper, a closed-loop supply chain network is investigated with decentralized decision-makers consisting of raw material suppliers, retail outlets, and the manufacturers that collect the recycled product directly from the demand market. We derive the optimality conditions of the various decision-makers, and establish that the governing equilibrium conditions can be formulated as a finite-dimensional variational inequality problem. We establish convergence of the proposed algorithm that can allow for the discussion of the effects of competition, distribution channel investment, yield and conversion rates, combined with uncertainties in demand, on equilibrium quantity transactions and prices. Numerical examples are provided for illustration.     

The impact of supply chain management practices on competitive advantage and organizational performance

Effective supply chain management (SCM) has become a potentially valuable way of securing competitive advantage and improving organizational performance since competition is no longer between organizations, but among supply chains. This research conceptualizes and develops five dimensions of SCM practice (strategic supplier partnership, customer relationship, level of information sharing, quality of information sharing, and postponement) and tests the relationships between SCM practices, competitive advantage, and organizational performance. Data for the study were collected from 196 organizations and the relationships proposed in the framework were tested using structural equation modeling. The results indicate that higher levels of SCM practice can lead to enhanced competitive advantage and improved organizational performance. Also, competitive advantage can have a direct, positive impact on organizational performance.     

Risk analysis of estimates for cost of quality in supply chain: a case study

Risk analysis for Cost of Quality (CoQ) in supply chain has not been adequately researched as evidenced in the literature. This paper attempts to analyse risk involved in estimating elements of CoQ in the internal supply chain of an integrated aluminium manufacturing company. We have applied grounded theory methodology on accounting codes of the case company primarily to bring out various elements of CoQ in its internal supply chain. They are categorized as ‘cost of prevention’, ‘cost of defective inputs’, ‘cost of defect in process’, and ‘cost of defect in output’. These elements are considered to be risky due to availability of partial information in past records of accounts while applying grounded theory methodology. In order to estimate the range and probabilities of all possible outcomes of various categories CoQ in the supply chain, Monte Carlo simulation has been used. The results have facilitated decision makers in strategic total quality management.     

On variance amplification in a three-echelon supply chain with minimum mean square error forecasting

We analyse a three echelon supply chain model. First-order autoregressive end consumer demand is assumed. We obtain exact analytical expressions for bullwhip and net inventory variance at each echelon in the supply chain. All of the three supply chain participants employ the order-up-to policy with the minimum mean square error forecasting scheme. After demonstrating that the character of the stochastic ordering process observed at each level of the supply chain is mathematically tractable, we show that the upper stream participants have complete information of the market demand process. Then we quantify the bullwhip produced by the system, together with the amplification ratios of the variance of the net inventory levels. Our analysis reveals that the level of the supply chain has no impact upon the bullwhip effect, rather bullwhip is determined by the accumulated lead-time from the customer and the local replenishment lead-time. We also find that the conditional variance of the forecast error over the lead-time is identical to the variance of the net inventory levels and that the net inventory variance is dominated by the local replenishment lead-time.     

供应链应收账款融资的决策分析与价值研究

根据供应链应收账款融资交易模型,建立了包含供应商、下游厂商和金融机构的多阶段供应链决策模型,研究了包含和不包含融资情况下相关企业的决策问题,得到供应链中各参与方在各阶段的期望收益,并通过数值分析研究了供应链应收账款融资对供应链成员和整个供应链的价值.分析发现:没有其他融资的情况下,中小供应商有可能出现生产不连续的情况,而供应链应收账款融资能够使其进行连续生产,并在快速增长的市场中能在较短的周期内达到最优产量;应收账款融资也能使厂商得到连续供货,收益持续增长,供应商的初始现金越多,厂商的期望收益越高;当供应商的实力较弱时,金融机构能够得到较大融资总收益,当供应商的实力达到一定程度后,金融机构得到的总收益呈下降趋势.供应链应收账款融资对中小供应商、厂商和金融机构都具有很大的应用价值.     

考虑战略顾客行为时的供应链性能分析与协调

动态定价策略的广泛应用使得越来越多的顾客具有了战略性,战略顾客会根据产品在销售期内的价格路径确定最优购买时机,零售商则根据顾客的购买行为确定订货数量和销售价格.研究了双方静态博弈时的理性预期均衡解和零售商进行数量承诺时的情形.研究表明:理性预期均衡时的最优销售价格、最优存货数量和最优期望利润分别小于标准报童模型的情形;数量承诺时的最优存货数量小于理性预期均衡时的最优存货数量;最优期望利润则大于理性预期均衡时的最优期望利润,并且在一定条件下可能会大于标准报童模型的最优期望利润,战略顾客行为的存在对零售商可能有利.最后分析了在分散式供应链中如何利用收入分享契约和数量折扣契约实现供应链协调.     

Impacts of buyers' order batching on the supplier's demand correlation and capacity utilization in a branching supply chain

There are several ways for a manufacturer to cope with demand uncertainty, e.g. inventories, capacity and cash. Among these, this study focuses on the second one, the capacity, especially on the problem of investing in flexible facilities and enhancing their utilization via demand management. In a supply chain, demands that an upstream firm (supplier) faces are the purchase orders from the downstream members (buyers). We analyse the impacts of buyers' order batching on the supplier's demand correlation and capacity utilization in a simple branching supply chain, where a supplier does business with two buyers whose market demands are correlated. Our results show that: (i) a supplier whofacesa smaller demand correlation coefficient (i.e. closer to-1) would invest more in flexible facilities; (ii) an increase in order lot size mitigates the correlation of purchase orders; and (iii) a supplier whose facilities are flexible would prefer frequent orders with smaller lots only when market demands are highly negatively correlated. This means that even suppliers whose facilities are flexible would rather prefer infrequent orders with larger lots in the presence of positively correlated demands. Additionally, some managerial implications are discussed.     

Sustainable planning strategies in supply chain systems: proposal and applications with a real case study in fashion

Abstract

Pollution generated by the fashion industry drives people to pay attention to fashion companies’ sustainability practice. This increase in attention has induced vast literature studying the related area. Since the fashion apparel supply chain is complicated which involves a lot of interrelated steps and decisions, how fashion companies can identify the demand in sustainable fashion and make the right decision in resource allocation throughout the supply chain becomes a critical issue. As a result, this paper examines how a fashion company can develop a successful sustainable planning strategy throughout the sustainable fashion supply chain. The sustainability attributes and the sustainable planning strategy mechanism are also discussed. Based on the institutional theory and resource-based theory, we first analyse the external pressure and internal motivations for companies to adopt a sustainable planning strategy in the fashion supply chain. We then identify the core stakeholders related to the sustainable planning strategy and propose how the decision-making theory can help develop the sustainable supply chain management mechanism. Next, we establish a sustainable planning strategy framework. Finally, via a case study with public data on the fashion giant brand Nike, we explore the application of our proposed sustainable planning strategy framework. The finding suggests that the strategic planning of fashion companies on sustainability can improve the performance of the stakeholders throughout the whole sustainable fashion supply chain.