Virtual transshipments and revenue-sharing contracts in supply chain management

This dissertation presents the use of virtual transshipments and revenue-sharing contracts for inventory control in a small scale supply chain. The main objective is to maximize the total profit in a centralized supply chain or maximize the supply chain\u27s profit while keeping the individual components\u27 incentives in a decentralized supply chain. First, a centralized supply chain with two capacitated manufacturing plants situated in two distinct geographical regions is considered. Normally, demand in each region is mostly satisfied by the local plant. However, if the local plant is understocked while the remote one is overstocked, some of the newly generated demand can be assigned to be served by the more remote plant. The sources of the above virtual lateral transshipments, unlike the ones involved in real lateral transshipments, do not need to have nonnegative inventory levels throughout the transshipment process. Besides the theoretical analysis for this centralized supply chain, a computational study is conducted in detail to illustrate the ability of virtual lateral transshipments to reduce the total cost. The impacts of the parameters (unit holding cost, production cost, goodwill cost, etc.) on the cost savings that can be achieved by using the transshipment option are also assessed. Then, a supply chain with one supplier and one retailer is considered where a revenue-sharing contract is adopted. In this revenue-sharing contract, the retailer may obtain the product from the supplier at a less-than-production-cost price, but in exchange, the retailer must share the revenue with the supplier at a pre-set revenuesharing rate. The objective is to maximize the overall supply chain\u27s total profit while upholding the individual components\u27 incentives. A two-stage Stackelberg game is used for the analysis. In this game, one player is the leader and the other one is the follower. The analysis reveals that the party who keeps more than half of the revenue should also be the leader of the Stackelberg game. Furthermore, the adoption of a revenue-sharing contract in a supply chain with two suppliers and one retailer under a limited amount of available funds is analyzed. Using the revenue-sharing contract, the retailer pays a transfer cost rate of the production cost per unit when he obtains the items from the suppliers, and shares the revenue with the suppliers at a pre-set revenue-sharing rate. The two suppliers have different transfer cost rates and revenue-sharing rates. The retailer will earn more profit per unit with a higher transfer cost rate. How the retailer orders items from the two suppliers to maximize his expected profit under limited available funds is analyzed next. Conditions are shown under which the optimal way the retailer orders items from the two suppliers exists

The analysis of performance in one single and dual channels

Suppliers routinely decide whether to distribute their products through one single channel or dual channels. Conventional wisdom says that dual distribution channels outperform one single channel based on the whole supply chain's performance in the capacity and the supplier's profit. However, this paper finds that the channel structure in the distribution plays an important role in these performances. The results show that at least one of the dual channels should be centralised in order to outperform the single centralised channel and two decentralised channels always do better than one single decentralised channel.single channels; dual channels; capacity; supplier profit; channel structure; distribution channels; centralised channels; decentralised channels; product distribution.

Improving public transit access to in-city villages

Rapid urbanisation results in the emergence of in-city villages in many developing countries. The lack of public transit access has been a long-standing problem for the residents in such villages. Here we develop a new mathematical model for adding stops onto the existing transit routes passing by the in-city villages, where the stops are decided by the optimisation of an objective function, which consists of the total supplier and user costs. Numerical examples are given to demonstrate the usefulness and efficiency of the proposed model for improving the transit access to the in-city villages.in-city villages; transit access; optimisation; supplier cost; user cost; developing countries; mathematical modelling.