Supply chain collaboration

In the past, research in operations management focused on single-firm analysis. Its goal was to provide managers in practice with suitable tools to improve the performance of their firm by calculating optimal inventory quantities, among others. Nowadays, business decisions are dominated by the globalization of markets and increased competition among firms. Further, more and more products reach the customer through supply chains that are composed of independent firms. Following these trends, research in operations management has shifted its focus from single-firm analysis to multi-firm analysis, in particular to improving the efficiency and performance of supply chains under decentralized control. The main characteristics of such chains are that the firms in the chain are independent actors who try to optimize their individual objectives, and that the decisions taken by a firm do also affect the performance of the other parties in the supply chain. These interactions among firms’ decisions ask for alignment and coordination of actions. Therefore, game theory, the study of situations of cooperation or conflict among heterogenous actors, is very well suited to deal with these interactions. This has been recognized by researchers in the field, since there are an ever increasing number of papers that applies tools, methods and models from game theory to supply chain problems

Cooperation in Supply Chain Networks: Motives, Outcomes, and Barriers

This paper analyzes the phenomenon of cooperation in modern supply chains in the light of Game Theory. We first provide a discussion on the meaning of cooperation in supply chains, its motives, outcomes and barriers. We then highlighted the applicability of Cooperative Game Theory as methodology for analyzing cooperation in supply chains. Second, we review recent studies that analyze the cooperation in supply chains by means of cooperative game theory. A special emphasis will be given inventory centralizations games. Finally, gaps in the literature are identified to clarify and to suggest future research opportunities

A review of non-cooperative newsvendor games with horizontal inventory interactions

There are numerous applications of game theory in the analysis of supply chains where multiple actors interact with each other in order to reach their own objectives. In this paper we review the use of non-cooperative game theory in inventory management within the newsvendor framework describing a single period inventory control model with the focus on horizontal interactions among multiple independent newsvendors. We develop a framework for identifying these types of horizontal interactions including, for example, the models with the possibility of inventory sharing via transshipments, and situations with substitutable products sold by multiple newsvendors. Based on this framework, we discuss and relate the results of prior research and identify future research opportunities

Optimization of a Dual-Channel Retailing System with Customer Returns

A plethora of retailers have begun to embrace a dual-channel retailing strategy wherein items are provided to consumers through both an online store and a physical store. As a result of standards and competitive measures, many retailers provide buyers who are unhappy with their purchases with the ability to achieve a full refund. In a dualchannel retailing system, full reimbursements can be done through what is called a crosschannel return, when a buyer purchases a product from an online store and returns it to a physical store. They can also be done through what is called a same-channel return, when a buyer purchases a product from a physical store and returns it back to the physical store, or purchases a product from an online store and returns it back to the online store. No existing research has examined all common types of customer returns in the context of a dual-channel retailing system. Be notified that the practice of cross-returning an item purchased from the physical store back to the online store is not common. Thus, it is not considered in this dissertation. We first study the optimal pricing policies for a centralized and decentralized dual-channel retailer (DCR) with same- and cross-channel returns. We consider two factors: the dual-channel retailer’s performance under centralization with unified and differential pricing schemes, and the dual-channel retailer’s performance under decentralization with the Stackelberg and Nash games. How dual-channel pricing behaviour is impacted by customer preference and rates of customer returns is discussed. In this study, a channel’s sales requests is a linear function of a channel’s own pricing strategy and a cross-channel’s pricing strategy. The second problem is an extension of the first problem. The optimal pricing policies and online channel’s responsiveness level for a centralized and decentralized dual-channel retailer with same- and cross-channel returns are studied. Indeed, the online store is normally the distribution centre of the enterprise and is not limited to the customers in its neighbourhood. Also, the online store experiences a much higher return rate compared to the physical store. Thus, it has the capability and the need to optimize its responsiveness to customer returns along with its pricing strategy. A channel’s sales requests, in the second problem, is a linear function of a channel’s own price, a crosschannel’s price, and the online store’s responsiveness level. The third problem studies the dilemma of whether or not to allow unsatisfactory online purchases to be cross-returned to the physical store. If not properly considered, those returns may create havoc to the system and a retailer might overestimate or underestimate a channel’s order quantity. Therefore, we study and compare between four vi different strategies, and propose models to determine optimal order quantities for each strategy when a dual-channel retailer offers both same and cross-channel returns. Several decision making insights on choosing between the different cross-channel return strategies and some properties of the optimal solutions are presented. From the retailer’s perspective of outsourcing the e-channel’s management to a third party logistics and service provider, we finally study three different inventory strategies, namely transaction-based fee, flat-based fee, and gain sharing. For each strategy, we find both channels’ optimal inventory policies and expected profits. The performances of the different strategies are compared and the managerial insights are given using analytical and numerical analysis. Methodologies, insights, comparative analysis, and computational results are delivered in this dissertation for the above aforementioned problems

Strategic Inventories in a Supply Chain with Vertical Control and Downstream Cournot Competition

Strategic Inventory (SI) has been an area of increased interest in theoretical supply chain literature recently. Most of the work so far however, has only considered a supply chain without downstream competition between retailers. Competition is ubiquitous in most market situations, hence, interactions between SI and retailer competition merits study as a first step in bringing the conversations and insights from this stream of literature to the real world. We present here a two-period and a three-period model of one manufacturer supplying an identical product to two retailers who form a Cournot duopoly. We also study a Commitment contract, where the manufacturer commits to all the selling seasons’ wholesale prices at the beginning of the 1st period. Commitment contracts have been shown previously to eliminate SI carriage over two selling seasons in the absence of retailer competition. We aim to deduce if this type of contract has the same effect in the presence of downstream competition. We determine closed-form Nash Equilibrium decision variable values for each of these models using game-theoretic modeling, a price-dependent linear demand function, and backward induction. We find that, the introduction of downstream Cournot duopoly competition leads to lower profits for both the manufacturer and retailer. This holds, whether the number of selling season is two or three. Consumer Surplus is also uniformly lower under retailer competition, compared to a downstream monopoly supply chain. When we try to deduce the effect of SI carriage under Cournot duopoly competition, by comparing an SC with Cournot duopoly competition and SI allowed between periods, to a similar SC with a Cournot duopoly downstream and a static, repeating, one-shot game in each period, with no SI carried – we find again that manufacturer and retailer profits are both lower when SI carriage is allowed. This holds whether the number of selling seasons is two or three. Consumer Surplus is also lower uniformly over both two and three selling seasons. Under a Commitment contract, over two selling seasons, the manufacturer ends up with an advantage, making a higher profit with downstream retailer competition, than compared to supplying to a monopoly downstream under the same contract. The retailers, while competing as a Cournot duopoly, are not able to use the relative advantage that comes from a Commitment contract to make a higher profit, as they are, when the downstream is a single retailer monopoly. The consumer also is disadvantaged by the introduction of downstream Cournot competition under a Commitment contract. When we compare a manufacturer supplying to a Cournot duopoly downstream of retailers, with, and without a Commitment contract (dynamic ordering), we see that the manufacturer and consumer benefit under a Commitment contract, making higher profits, but the retailer is at a disadvantage. It would be an interesting extension of this work to generalize the results from two and three selling seasons, presented here, to the “n” period case. It would also be benefi-cial to run empirical studies in real-world supply chains to validate if and to what extent the insights developed by this kind of game-theoretic modeling hold in a real-world supply chain setting. Development of contracts that are more effective than a Commitment con-tract in coordinating this supply chain would be another possible area for further research

Supply Chain

Traditionally supply chain management has meant factories, assembly lines, warehouses, transportation vehicles, and time sheets. Modern supply chain management is a highly complex, multidimensional problem set with virtually endless number of variables for optimization. An Internet enabled supply chain may have just-in-time delivery, precise inventory visibility, and up-to-the-minute distribution-tracking capabilities. Technology advances have enabled supply chains to become strategic weapons that can help avoid disasters, lower costs, and make money. From internal enterprise processes to external business transactions with suppliers, transporters, channels and end-users marks the wide range of challenges researchers have to handle. The aim of this book is at revealing and illustrating this diversity in terms of scientific and theoretical fundamentals, prevailing concepts as well as current practical applications

Examining price and service competition among retailers in a supply chain under potential demand disruption

© 2017 Elsevier Ltd Supply chain disruptions management has attracted significant attention among researchers and practitioners. The paper aims to examine the effect of potential market demand disruptions on price and service level for competing retailers. To investigate the effect of potential demand disruptions, we consider both a centralized and a decentralized supply chain structure. To analyze the decentralized supply chain, the Manufacturing Stackelberg (MS) game theoretical approach was undertaken. The analytical results were tested using several numerical analyses. It was shown that price and service level investment decisions are significantly influenced by demand disruptions to retail markets. For example, decentralized decision makers tend to lower wholesale and retail prices under potential demand disruptions, whereas a proactive retailer needs to increase service level with an increased level of possible disruptions. This research may aid managers to analyze disruptions prone market and to make appropriate decision for price and service level. The manufacturer or the retailers will also be able to better determine when to close a market based on the proposed analysis by considering anticipated disruptions. The benefits and usefulness of the proposed approach are explained through a real-life case adopted from a toy supply chain in Bangladesh

The diffusion of innovations: The influence of supply-side factors

Technological Change;microeconomics

Coordinating Contracts in SCM: A Review of Methods and Literature

Supply chain coordination through contracts has been a burgeoning area of re- search in recent years. In spite of rapid development of research, there are only a few structured analyses of assumptions, methods, and applicability of insights in this field. The aim of this paper is to provide a systematic overview of coordinating contracts in supply chain through highlighting the main concepts, assumptions, methods, and present the state-of-the- art research in this field

Supply Chain Coordination under Advance-purchase Discount Contract with Sales Effort and Transshipment

In today’s business environment, a competition is no longer about competing between firms, but between supply chains. Improving supply chain’s performance has become necessary for companies to survive. Supply chain coordination ensures a maximumperformance of a supply chain. This dissertation studies impacts of an advance-purchase contract and supply chain coordination in two different supply chains.We first consider the supply chain with the manufacturer and retailer who can exert sales effort to stipulate demand. We develop the contract that combines the advance-purchase contract and the target rebate contract to coordinate the retailer’s ordering and effort decisions. We analytically show that supply chain coordination is achievable, but profit splitting may not be fully flexible depending on market conditions.We second consider the supply chain with the manufacturer and two retailers who can transship products to satisfy unmet demand as a result of an inventory shortage. We establish a new mechanism that integrates the advance-purchase contract to coordinate the supply chain. The coordination mechanism follows in two steps: it first aligns the objective of the retailer group with the objective of the supply chain, and second aligns the individual objective of each individual retailer with the joint objective of the retailer group. We analytically show that supply chain coordination and arbitrary profit split is achievable.The coordinating contracts lead to Pareto improving situations. The numerical analyses show the performance improvement of the supply chain from the inclusion of the advance-purchase contract. We also conduct the sensitivity analyses to see the impacts of the contract terms on the retailers’ optimal decisions, and the impacts of market conditions on the contracts. The potential future research directions for both studies are also discussed.Industrial Engineering & Managemen