Supply chain coordination with manufacturer's limited reserve capacity: An extended newsboy problem
AbstractThis paper develops an extended newsboy model and presents a coordination decision policy in a supply chain consisting of one manufacturer and one retailer. In order to meet a random demand, the retailer can place a second order at the end of the period if a stock-out occurs. The manufacturer's reserve capacity for the retailer's second order is limited to M units. To maximize each individual's expected profit, the retailer decides his optimal order quantity and the manufacturer decides his optimal reserve capacity. A coordination mechanism is designed which can make the supply chain increase profit. A price discount policy is developed to allocate the expected increased profits between two sides of the supply chain.
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Bibliographic InfoArticle provided by Elsevier in its journal International Journal of Production Economics.
Volume (Year): 112 (2008)
Issue (Month): 2 (April)
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Web page: http://www.elsevier.com/locate/ijpe
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- Chou, Yon-Chun & Chung, Hsien-Jung, 2009. "Service-based capacity strategy for manufacturing service duopoly of differentiated prices and lognormal random demand," International Journal of Production Economics, Elsevier, vol. 121(1), pages 162-175, September.
- Li, Sijie & Zhu, Zhanbei & Huang, Lihua, 2009. "Supply chain coordination and decision making under consignment contract with revenue sharing," International Journal of Production Economics, Elsevier, vol. 120(1), pages 88-99, July.
- Hung, Yick-Hin & Li, Leon Y.O. & Cheng, T.C.E., 2011. "Trading reserved capacity independently among supply chains," International Journal of Production Economics, Elsevier, vol. 133(1), pages 105-112, September.
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