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Lead time aggregation: A three-echelon supply chain model

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  • Heydari, Jafar
  • Mahmoodi, Mansour
  • Taleizadeh, Ata Allah

Abstract

In this paper, destructive effects of upstream aggregated stochastic lead times on the supply chain (SC) performance are analyzed. For this purpose, a three-echelon SC consisting of one producer, one distributor, and one retailer is modeled. Both the producer and distributor face stochastic lead times, which can be also aggregated to create a long unpredictable lead time. In order to scale down shortages at the retailer site, an incentive scheme is proposed to convince the upstream members to increase their reorder points. Applying the coordinated model considerably increases the total profit earned by the whole SC as well as all SC members.

Suggested Citation

  • Heydari, Jafar & Mahmoodi, Mansour & Taleizadeh, Ata Allah, 2016. "Lead time aggregation: A three-echelon supply chain model," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 89(C), pages 215-233.
    • Handle: RePEc:eee:transe:v:89:y:2016:i:c:p:215-233
    DOI: 10.1016/j.tre.2016.03.006
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    Cited by:

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    2. Farkas, Gábor, 2016. "The Connection between the Distance of the Suppliers and the Keeping of the Safety Stock," Proceedings of the ENTRENOVA - ENTerprise REsearch InNOVAtion Conference (2016), Rovinj, Croatia, in: Proceedings of the ENTRENOVA - ENTerprise REsearch InNOVAtion Conference, Rovinj, Croatia, 8-9 September 2016, pages 428-433, IRENET - Society for Advancing Innovation and Research in Economy, Zagreb.
    3. Jian Li & Lu Liu & Hao Hu & Qiuhong Zhao & Libin Guo, 2018. "An Inventory Model for Deteriorating Drugs with Stochastic Lead Time," IJERPH, MDPI, vol. 15(12), pages 1-20, December.
    4. Bandaly, Dia & Satir, Ahmet & Shanker, Latha, 2016. "Impact of lead time variability in supply chain risk management," International Journal of Production Economics, Elsevier, vol. 180(C), pages 88-100.
    5. Ponte, Borja & Costas, José & Puche, Julio & Pino, Raúl & de la Fuente, David, 2018. "The value of lead time reduction and stabilization: A comparison between traditional and collaborative supply chains," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 111(C), pages 165-185.
    6. M. A. Hoque, 2021. "An optimal solution policy to an integrated manufacturer-retailers problem with normal distribution of lead times of delivering equal and unequal-sized batches," OPSEARCH, Springer;Operational Research Society of India, vol. 58(2), pages 483-512, June.
    7. Viktoryia Buhayenko & Sin C. Ho & Anders Thorstenson, 2018. "A variable neighborhood search heuristic for supply chain coordination using dynamic price discounts," EURO Journal on Transportation and Logistics, Springer;EURO - The Association of European Operational Research Societies, vol. 7(4), pages 363-385, December.

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