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Retailer policy, uncertainty reduction, and supply chain performance

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  • Kwak, Jin Kyung
  • Gavirneni, Srinagesh

Abstract

We investigate how the retailer's inventory policy affects the total cost of a serial supply chain. When the retailer uses the locally optimal (s,S) policy, there is randomness in order time and order quantity to the supplier whereas the supplier sees randomness only in order quantity for the suboptimal (R,T) policy and only in order time for another suboptimal (Q,r) policy. Using an extensive computational study, we find that the suboptimal policies perform better from the total supply chain perspective. The benefit of policy changes is magnified when the retailer costs are low, when the supplier costs are high, and when there is information sharing.

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  • Kwak, Jin Kyung & Gavirneni, Srinagesh, 2011. "Retailer policy, uncertainty reduction, and supply chain performance," International Journal of Production Economics, Elsevier, vol. 132(2), pages 271-278, August.
    • Handle: RePEc:eee:proeco:v:132:y:2011:i:2:p:271-278
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    References listed on IDEAS

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    Cited by:

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    3. Fleischhacker, Adam J. & Fok, Pak-Wing, 2015. "On the relationship between entropy, demand uncertainty, and expected loss," European Journal of Operational Research, Elsevier, vol. 245(2), pages 623-628.

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