Supply Chain Coordination for Newsvendor-Type Products with Two Ordering Opportunities

Yong-Wu Zhou () and Sheng-Dong Wang ()
Additional contact information
Yong-Wu Zhou: South China University of Technology
Sheng-Dong Wang: Hefei Electronic Engineering Institute

A chapter in Supply Chain Coordination under Uncertainty, 2011, pp 315-343 from Springer

Abstract: Abstract This chapter discusses supply chain coordination issues for a newsvendor-type product with two ordering opportunities. We consider a two-echelon supply chain consisting of one manufacturer and one buyer, where the manufacturer sells his product through the buyer who faces a random demand. The manufacturer does not hold inventory but activates production with a fixed production setup cost to respond to the buyer’s order. At the start of the selling period, the buyer’s first order is delivered. By the end of the sales period, an urgent second order is allowed to meet the willingly-backordered demand if the buyer shares the manufacturer’s setup cost incurred by the second order. We discuss two parties’ optimal order policies in the decentralized setting, and examine the impact of pool schemes of the second setup cost on the decentralized system performance. We show that the decentralized system would perform best if the manufacturer covers utterly the second production setup cost. Also, we prove that under the twice-order framework in the chapter the expected profit of the centralized system is not equal to but greater than the sum of two members’ expected profits in the decentralized system, which is not consistent with our expectation. In order to maximize the expected profit of the channel, two coordinated policies are proposed to achieve perfect coordination: a two-part-tariff policy for the special case that the buyer pays all the manufacturing setup cost, and a revised revenue-sharing contract for the case that two parties share the manufacturing setup cost.

Keywords: Supply chain coordination; Newsvendor model; Two ordering opportunities; Partial backlogging; Revised revenue-sharing contract (search for similar items in EconPapers)
Date: 2011
References: Add references at CitEc
Citations: View citations in EconPapers (1)

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

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:spr:ihichp:978-3-642-19257-9_13

Ordering information: This item can be ordered from
http://www.springer.com/9783642192579

DOI: 10.1007/978-3-642-19257-9_13

Access Statistics for this chapter

More chapters in International Handbooks on Information Systems from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().