Lead time aggregation: A three-echelon supply chain model

Jafar Heydari, Mansour Mahmoodi and Ata Allah Taleizadeh

Transportation Research Part E: Logistics and Transportation Review, 2016, vol. 89, issue C, 215-233

Abstract: In this paper, destructive effects of upstream aggregated stochastic lead times on the supply chain (SC) performance are analyzed. For this purpose, a three-echelon SC consisting of one producer, one distributor, and one retailer is modeled. Both the producer and distributor face stochastic lead times, which can be also aggregated to create a long unpredictable lead time. In order to scale down shortages at the retailer site, an incentive scheme is proposed to convince the upstream members to increase their reorder points. Applying the coordinated model considerably increases the total profit earned by the whole SC as well as all SC members.

Keywords: Supply chain coordination; Lead time aggregation; Stochastic lead time; Three-echelon supply chain (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (8)

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DOI: 10.1016/j.tre.2016.03.006

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