Research on Decentralized Supply Chain with Channel-Wide Profit Maximization
Science Journal of Business and Management
Volume 5, Issue 4, August 2017, Pages: 132-135
Received: Jun. 12, 2017; Published: Jun. 14, 2017
Views 2340      Downloads 110
Liang-Tu Chen, Department of Commerce Automation and Management, National Pingtung University, Pingtung, Taiwan ROC
Shih-Wen Chien, Department of Information Management, National Kaohsiung University of Applied Sciences, Kaohsiung, Taiwan ROC
Chun-Chin Wei, Department of Marketing and Distribution Management, Chien-Hsin University, Chungli, Taiwan ROC
Article Tools
Follow on us
This study explores the problem of optimally dynamic joint decisions: replenishment quantity, retail price and depletion time, in a vertically decentralized single-retailer and single-supplier supply chain over a dynamic multi-period planning horizon, subject to multivariate demand function and deteriorating goods with shortages allowed and with no consideration of fixed costs. This research uses a calculus-based formulation coupled with dynamic programming techniques to solve the channel-wide profit maximization under price-only contract and consignment contract respectively. The analysis reveals that the consignment contract can significantly achieve higher channel-wide profit than the price-only contract for the dynamic decentralized channel.
Decentralized Supply Chain, Dynamic Pricing, Shortages, Fixed Costs
To cite this article
Liang-Tu Chen, Shih-Wen Chien, Chun-Chin Wei, Research on Decentralized Supply Chain with Channel-Wide Profit Maximization, Science Journal of Business and Management. Vol. 5, No. 4, 2017, pp. 132-135. doi: 10.11648/j.sjbm.20170504.11
Tsay AA, Nahmias S, Agrawal N. Modeling supply chain contracts: a review. In S. Tayur, R. Ganeshan and M. Magazine (eds), Quantitative Models for Supply Chain Management, Kluwer Academic Publishers, Boston. 1999.
Cachon GP. Supply chain coordination with contracts. In A. G. de Kok and S. Graves (eds), Handbooks in Operations Research and Management Science: Supply Chain Management, Elsevier Science Publishers B.V. (North Holland), Amsterdam. 2003.
Höhn MI. Relational supply contracts: optimal concessions in return policies for continuous quality improvements. Lecture Notes in Economics and Mathematical Systems 2010; 629:1-119.
Panda S, Modak, NM, Pradhan, D. Corporate social responsibility, channel coordination and profit division in a two-echelon supply chain. International Journal of Management Science and Engineering Management 2016; 11(1): 22-33.
Modak NM, Panda S, Sana SS. Pricing policy and coordination for a distribution channel with manufacturer suggested retail price. International Journal of Systems Science: Operations & Logistics 2016; 3(2): 92-101.
Chena X, Wangb X, Chan HK. Channel coordination through subsidy contract design in the mobile phone industry. International Journal of Production Economics 2016; 171: 97-104.
Bolen WH. Contemporary Retailing, third ed. Prentice Hall: New Jersey. 1988.
Ha AY, Tong S. Revenue sharing contracts in a supply chain with uncontractible actions. Naval Research Logistics 2008; 55(5): 419-431.
Ru J, Wang Y. Consignment contracting: who should control inventory in the supply chain. European Journal of Operational Research 2010; 201(3):760-769.
Chen LT. Dynamic supply chain coordination under consignment and vendor-managed inventory in retailer-centric B2B electronic markets. Industrial Marketing Management 2013; 42(4):518-531.
Chen LT. Buyer-supplier relationship and optimisation model in a dynamic collaborative network with shortages allowed. International Journal of Computer Integrated Manufacturing 2017; 30(7):755-767.
Simchi-Levi D, Kaminsky P, Simchi-Levi E. Designing and Managing the Supply Chain: Concepts, Strategies, and Case Studies. McGraw-Hill: Taiwan, 2008.
Pashigian BP, Bowen B. Why are products sold on sale? explanations of pricing regularities. The Quarterly Journal of Economics 1991; 106:1015-1038.
Elmaghraby W, Keskinocak P. Dynamic pricing in the presence of inventory considerations: research overview, current practices, and future directions. Management Science 2003; 49:1287-1309.
Chen JM, Chen LT. Market-driven production lot-size and scheduling with finite capacity for a deteriorating item. Production Planning and Control 2006; 17(1):44-53.
Cabral L. Dynamic pricing in customer markets with switching costs. Review of Economic Dynamics 2016; 20:43-62.
Varella RR, J Frazão, Oliveira AVM. Dynamic pricing and market segmentation responses to low-cost carrier entry. Transportation Research Part E: Logistics and Transportation Review 2017; 98: 151-170.
Newton FJ. Information please: do you have any information on inventory shortages? Management Accounting 1988; 70:52-53.
Wee HM, Jong JF, Yang PC. A discussion on economic ordering policy of deteriorated item for vendor and buyer. Production Planning & Control 2006; 17(8):792-795.
Lin YS, Yu JCP, Wang KJ. An efficient replenishment model of deteriorating items for a supplier-buyer partnership in hi-tech industry. Production Planning & Control 2009; 20(5): 431-444.
Science Publishing Group
1 Rockefeller Plaza,
10th and 11th Floors,
New York, NY 10020
Tel: (001)347-983-5186