Coordinating supplier-retailer using multiple common replenishment epochs with retailers’ choices

This paper explores the impact of quality improvement on joint economic lot size (JELS) models. It begins with the individual optimality of a supplier, which makes the deliveries during the production period, as soon as the quantity is equal to the batch size. The individual optimality of the buyer is based on the economics order quantity (EOQ) model, whereas the supplier is based on the economic manufacturing quantity (EMQ). A cooperative collaboration is stated based on a long-term agreement for sharing information. The result of the study shows that the JELS with quality improvement will provide smaller sub-lot sizes and lower joint total cost of 2.25% compares to the JELS without quality improvement. The purpose of quality improvement is to increase the proportion of conforming items. The result shows this proportion can only be improved under 0.879 and this value depends on the parameters in the investment function.

Forward and backward stocking policies for a two-level supply chain with consignment stock agreement and stock-dependent demand

Rapid market changes, explosion of product varieties and short life cycles have increased competition in today's global markets. It is obvious that in today's competitive markets, collaboration between the vendor and the buyer is necessary to reduce the joint inventory cost and the response time of the vendor-buyer system. Joint Economic Lot sizing Problem has been extended in many different directions. Shortage is not allowed in the most of the previous researches. A few of them considered shortage backordering as a result of imperfect quality. The purpose of this paper is to recast the Joint economic lot sizing model to be more relevant to current situations, where lost sales and/or backorders are more probable and could be cost efficient.

A note on “quality improvement and setup reduction in the joint economic lot size model”

This paper derives a mathematical integrated production inventory model of single vendor and buyer to investigate the effects of capital investment in setup cost of the vendor and order processing cost of the buyer on the decision variables of the model. Main purpose of this study is to minimize the integrated total cost of the vendor and buyer by optimizing the delivery lot size, lead-time, setup and order processing cost and number of deliveries per order simultaneously while lead-time demand follows normal distribution and unknown distribution, i.e., distribution free case. This model is analyzed by calculus method and justified with appropriate numerical illustrations. Numerical results show that significant savings can be achieved at optimal investments in reducing lead time, ordering cost and setup cost. Finally, sensitivity analysis of the key parameters is carried out and some managerial implications are also included.

In most economic lot size models, the demand during stockout period is either completely backordered, or lost. Also, the quantity received is assumed to be the same as the quantity ordered. In this paper, a lot size model is described in which the demand during stockout period is either completely or partially backordered, and also the quantity received is uncertain. The standard deviation of the quantity received is taken to be independent of, or proportional to, the quantity ordered. In both cases, the results obtained are shown to be extensions of the well known results of the simple lot size model with backordering.

This work explores the relationship between decision-makers in a company and their suppliers using stability contracts. This relationship can be modelled as a capacitated multi-machine lot sizing problem with minimum order quantity and dynamic time windows, where orders are represented by production levels. Both the amount and the frequency of orders are constrained, the first by upper and lower bounding and the second by dynamic time windows. A mathematical model is provided and an experimental analysis is conducted. A cost study highlights that using proper stability contracts in certain condition can reduce the storage cost of the retailer, improving the whole supply chain efficiency. Conclusions are given leading to insight for decision-makers and contract designers.

This article studies competition and coordination in a dual-channel supply chain where one supplier supplies homogeneous products to multiple asymmetric retailers, meanwhile, selling products to the end consumers acting as retailers, through a two-level Stackelberg game. This article first studies the asymmetry among the retailers in terms of the different characteristics of the cost, price, quantity. This article finds that a supplier's profits increase when the number of retailers are high enough in the retail market, even though the retail price of the retailers is lower than that of the supplier, or the wholesale price is cut down when there are many retailers competing in the retail market. On the other hand, under certain conditions, the efficiency of supply chain goes to 1. In this article, the authors show that some traditional contracts that can perfectly coordinate the single-channel supply chain, while failing to coordinate the dual-channel supply chain. Therefore, this article puts forth a linear quantity discount contract and first proves it can be applicable to the dual-channel supply chain with asymmetric retailers under a certain special condition where the lead retailer exits the retail market. The authors examine contracts which can reduce the loss of the efficiency, though they cannot completely coordinate a dual-channel supply chain.

DR. ALAN TREADGOLD is a research associate in the Oxford Institute of Retail Management at Templeton College, England. The successful application of instore information technology systems has been identified as a source of substantial competitive advantage for retail businesses. Multiple retail businesses, in the United Kingdom as elsewhere, are demonstrably committed to heavy investment programmes in data collection, transmission and manipulation systems. There has, however, prevailed an assumption that the application of l.T. systems is confined to large multiple retailers. In consequence little is known of the activities of the smaller independent retailer. This paper addresses this knowledge gap. Three l.T. devices, namely EPOS (electronic point of sale) terminals, in-store computers, and portable data capture units (PCDUs), are identified as especially well-suited for application in even the smallest retail outlets. An attempt is made, through the presentation of the results of survey work. to identify the overall level of I.T. device adoption, adoption by principal trading activity and size of outlet, and the success of l.T. applications in this sector of the retail trades.

This paper considers a single item, imperfect economic production lot-size (EPL) model with stock-dependent demand and partial rework. In real life EPL models, defective production commences from the out-of-control state, after the passage of some time from production commencement. Its occurrence is random after the lapse of certain time and imposed here through a chance constraint. The set-up cost is partly production dependent. Unit production cost is also production dependent and a part of it is taken as environment protection cost. Defective rate is also assumed to be random and production dependent. The model is formulated as an average cost minimisation problem subject to a chance constraint and solved using a nonlinear optimisation technique - generalised reduced gradient (GRG) method through LINGO 11.0. Several special cases are derived and more specifically, the present investigation the works of Sana (2010) and Khouja and Mehrez (1994). Numerical experiments are performed to illustrate the general and particular models. Some sensitivity analyses are presented against few model parameters.

We study an extension of the economic production lot size model, where more than one production rate can be used during a cycle. Moreover, the production rates, as well as their corresponding runtimes are decision variables. We decompose the problem into two subproblems. First, we show that all production rates should be chosen in the interval between the demand rate and the production rate which minimizes unit production costs, and should be used in an increasing order. Then, given the production rates, we derive closed‐form expressions for all optimal runtimes as well as the minimum average cost. This analysis reveals that it is the size of the setup cost that determines the need for being able to use several production rates. We also show how to derive a near‐optimal solution of the general problem.

This study focused on the challenges faced by a group of independent and small retailers called Bul-anon retailers and identified coping mechanisms adopted. The study was conducted to investigate the coping me­chanisms that can be utilized by other members of the retail industry to continue to thrive despite difficulties. Findings indicated that the challenges faced by the Bul-anon retailers revolved around three of the four primary business functions: marketing, finance/accounting, and operations. To avoid the significant impact of the above challenges, retailers adopted coping mechanisms to stay in business amidst large department stores and other businesses. How they handled their customers, being customer-oriented, was the winning mechanism for the survival of these retailers.

This study investigates the impacts of an electronic marketplace with multiple independent retailers for a smart grocery ordering system. Apart from replenishing products from suppliers, the system can also purchase/sell products from/to the electronic marketplace through `spot shops'. Both static and dynamic pricing models for the electronic marketplace are developed. An extensive numerical experiment is conducted and the results show that under both static and dynamic pricing, (i) the inventory cost of the aggregated supply chain is significantly reduced; (ii) each participant also enjoys significant cost savings from employing the electronic marketplace. Furthermore, the cost savings increase as the lead times from suppliers increase and/or the variability of their demands increases. The participants' cost savings also increase as more participants employ the electronic marketplace.

We study the stochastic transportation-inventory network design problem involving one supplier and multiple retailers. Each retailer faces some uncertain demand, and safety stock must be maintained to achieve suitable service levels. However, risk-pooling benefits may be achieved by allowing some retailers to serve as distribution centers for other retailers. The problem is to determine which retailers should serve as distribution centers and how to allocate the other retailers to the distribution centers. Shen et al. (2003) formulated this problem as a set-covering integer-programming model. The pricing problem that arises from the column generation algorithm gives rise to a new class of the submodular function minimization problem. In this paper, we show that by exploiting certain special structures, we can solve the general pricing problem in Shen et al. efficiently. Our approach utilizes the fact that the set of all lines in a two-dimension plane has low VC-dimension. We present computational results on several instances of sizes ranging from 40 to 500 retailers. Our solution technique can be applied to a wide range of other concave cost-minimization problems.

Economic production lot size model for deteriorating items with partial back-ordering