A joint economic lot size model with financial collaboration and uncertain investment opportunity
B. Marchi,
J.M. Ries,
S. Zanoni and
C.H. Glock
International Journal of Production Economics, 2016, vol. 176, issue C, 170-182
Abstract:
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.
Keywords: Integrated inventory; Supplier credits; Variable production rate; Uncertain investment; Annuity stream approach (search for similar items in EconPapers)
Date: 2016
References: Add references at CitEc
Citations: View citations in EconPapers (19)
Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0925527316300202
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:176:y:2016:i:c:p:170-182
DOI: 10.1016/j.ijpe.2016.02.021
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 ().