On the Impact of Fixed Cost Reduction in the Strategic Lotsizing Framework

Guido Voigt
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Guido Voigt: Otto-von-Guericke University Magdeburg

Chapter Chapter 3 in Supply Chain Coordination in Case of Asymmetric Information, 2011, pp 45-66 from Springer

Abstract: Abstract This section elaborates the impact of costly fixed cost reduction on the coordination deficit arising through asymmetric information in the strategic lotsizing framework (see Sect. 2.2.2). Section 3.1 reviews the relevant literature of fixed cost reduction in the (joint) economic lotsizing model, and motivates why fixed cost reduction is introduced in the strategic lotsizing framework. Section 3.2 derives the optimal fixed cost level and contract parameters under full and asymmetric information. Section 3.3 analyses the distorting impact of asymmetric information on the fixed cost level decision. Section 3.4 illustrates the general results for a numerical example, in which the fixed cost investment costs are convex in the respective fixed cost level. Section 3.5 summarizes the results and gives some managerial insights.

Date: 2011
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DOI: 10.1007/978-3-642-20132-5_3

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