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Single-vendor multi-buyer supply chain coordination with stochastic demand

Chi Kin Chan, Fei Fang and André Langevin

International Journal of Production Economics, 2018, vol. 206, issue C, 110-133

Abstract: This paper proposes a model of single-vendor multi-buyer supply chain coordination with stochastic demand in which the vendor's production cycle length and the buyers' ordering cycle lengths are synchronized. A mathematical model for the coordination policy considering possible stock-out and/or excessive stock is formulated, and a solution algorithm for the model is developed. The numerical results show that, under stochastic situation, our coordination model performs better than two other policies, the decentralized decision making model and the common cycle coordination model. Considering the difficulty of estimating shortage cost, trade-off curves are plotted along a range of service levels to further compare the models and reinforce our results.

Keywords: Supply chain coordination; Stochastic demand; Synchronization; Single-vendor multi-buyer (search for similar items in EconPapers)
Date: 2018
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Handle: RePEc:eee:proeco:v:206:y:2018:i:c:p:110-133