Comparing different coordination scenarios in a three-level supply chain system

Siraj K. Zahran, Mohamad Y. Jaber and Simone Zanoni

International Journal of Production Research, 2017, vol. 55, issue 14, 4068-4088

Abstract: The consignment stock (CS) policy, independently or coupled with vendor managed inventory (VMI), has been practised by businesses and shown to be profitable. It helps to reduce or eliminate out-of-stock instances caused by fluctuations in demand. CS brings several benefits to collaborating parties. Unlike the two-level supply chain models in the literature, this paper considers a three-level supply chain that consists of a supplier, a vendor and a buyer with CS policy agreements. The paper also examines four coordination scenarios (a combination of traditional and CS) in conjunction with a payment scheme between adjacent parties. Nine coordination cases (models) are provided. A sensitivity analysis is performed to study the effects of some parameters on the performance of the developed models. Most of the results showed that a combination of traditional and CS policies returned a higher total system profit.

Date: 2017
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DOI: 10.1080/00207543.2016.1249431

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