A coordination mechanism for supplier selection and order quantity allocation with price-sensitive demand and finite production rates

José A. Ventura, Kevin A. Bunn, Bárbara B. Venegas and Lisha Duan

International Journal of Production Economics, 2021, vol. 233, issue C

Abstract: We study a supplier selection and order quantity allocation problem in a two-stage supply chain, which is composed of a set of potential suppliers and a single buyer/retailer trading one product. The demand at the buyer's stage is price-sensitive and suppliers have finite production rates. Within this framework, the optimization of the supply chain is evaluated by considering the performance of both stages and guaranteeing their profitability through a coordination mechanism based on profit-sharing. Two mixed integer nonlinear programming models are presented under different lot-sizing policies to determine the optimal set of selected suppliers, retail price, and order quantity and number of orders per order cycle for each selected supplier. The structure of the models' solutions is examined by deriving properties of the optimal supplier selection and order quantity allocation scheme. Numerical examples are also provided to illustrate the applicability of the proposed models.

Keywords: Supplier selection; Finite production rates; Inventory lot-sizing; Price-sensitive demand; Order frequency policy; Profit-sharing (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S092552732030356X
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:proeco:v:233:y:2021:i:c:s092552732030356x

DOI: 10.1016/j.ijpe.2020.108007

Access Statistics for this article

International Journal of Production Economics is currently edited by Stefan Minner

More articles in International Journal of Production Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().