Input Quantity Decision and Coordination Mechanism with Two Production Chances and Yield Uncertainty

Jianhu Cai, Haining Sun, Xuejiao Li and Daji Ergu
Additional contact information
Jianhu Cai: School of Management, Hangzhou Dianzi University, Hangzhou, Zhejiang 310018, P. R. China†School of Management, Zhejiang University of Technology, Hangzhou, Zhejiang 310023, P. R. China
Haining Sun: ��School of Management, Zhejiang University of Technology, Hangzhou, Zhejiang 310023, P. R. China
Xuejiao Li: ��School of Management, Zhejiang University of Technology, Hangzhou, Zhejiang 310023, P. R. China
Daji Ergu: Key Laboratory of Electronic & Information Engineering, State Ethnic Affairs Commission, Southwest Minzu University, Chengdu, Sichuan 610041, P. R. China

International Journal of Information Technology & Decision Making (IJITDM), 2022, vol. 21, issue 01, 315-349

Abstract: Conducting a second production run can improve the company’s capability of meeting the market demand. Few works examine optimal input quantity decisions under the mode with two production chances considering demand and yield uncertainty. We propose a vendor-managed inventory (VMI) supply chain with one supplier and one retailer. The supplier has two production chances and faces yield uncertainty in each production run. It is necessary for the supplier to make trade-offs between the cost and benefit of the second production run, then decide whether to conduct the second production run. We investigate the supplier’s optimal input quantity decision in each production run and obtain the supply chain members’ expected profits. As a comparison, the mode with one production chance is also developed. We find that two production chances can help improve the performance of the supply chain under yield uncertainty. A revenue-sharing contract is introduced to coordinate the supply chain with two production chances, and efficient profit allocation is achieved through adjusting the revenue-sharing ratio and the wholesale price. An extension is conducted for a sensitivity analysis of unit punishment cost on the supplier’s input quantity decisions.

Keywords: Yield uncertainty; two production chances; input quantity; supply chain coordination (search for similar items in EconPapers)
Date: 2022
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.worldscientific.com/doi/abs/10.1142/S0219622021500668
Access to full text is restricted to subscribers

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:wsi:ijitdm:v:21:y:2022:i:01:n:s0219622021500668

Ordering information: This journal article can be ordered from

DOI: 10.1142/S0219622021500668

Access Statistics for this article

International Journal of Information Technology & Decision Making (IJITDM) is currently edited by Yong Shi

More articles in International Journal of Information Technology & Decision Making (IJITDM) from World Scientific Publishing Co. Pte. Ltd.
Bibliographic data for series maintained by Tai Tone Lim ().