IDEAS home Printed from https://ideas.repec.org/a/gam/jmathe/v8y2020i6p911-d366937.html
   My bibliography  Save this article

Coordination Supply Chain Management Under Flexible Manufacturing, Stochastic Leadtime Demand, and Mixture of Inventory

Author

Listed:
  • Asif Iqbal Malik

    (Department of Industrial & Management Engineering, Gachon University, Seongnam-si, Gyeonggi-do 13120, Korea)

  • Biswajit Sarkar

    (Department of Industrial Engineering, Yonsei University, 50 Yonsei-ro, Sinchon-dong, Seodaemun-gu, Seoul 03722, Korea)

Abstract

The necessity of coordination among entities is essential for the success of any supply chain management (SCM). This paper focuses on coordination between two players and cost-sharing in an SCM that considers a vendor and a buyer. For random demand and complex product production, a flexible production system is recommended. The study aims to minimize the total SCM cost under stochastic conditions. In the flexible production systems, the production rate is introduced as the decision variable and the unit production cost is minimum at the obtained optimal value. The setup cost of flexible systems is higher and to control this, a discrete investment function is utilized. The exact information about the probability distribution of lead time demand is not available with known mean and variance. The issue of unknown distribution of lead time demand is solved by considering a distribution-free approach to find the amount of shortages. The game-theoretic approach is employed to obtain closed-form solutions. First, the model is solved under decentralized SCM based on the Stackelberg model, and then solved under centralized SCM. Bargaining is the central theme of any business nowadays among the players of an SCM to make their profit within a centralized and decentralized setup. For this, a cost allocation model for lead time crashing cost based on the Nash bargaining model with the satisfaction level of SCM members is proposed. The cost allocation model under Nash bargaining achieves exciting results in SCM coordination.

Suggested Citation

  • Asif Iqbal Malik & Biswajit Sarkar, 2020. "Coordination Supply Chain Management Under Flexible Manufacturing, Stochastic Leadtime Demand, and Mixture of Inventory," Mathematics, MDPI, vol. 8(6), pages 1-32, June.
    • Handle: RePEc:gam:jmathe:v:8:y:2020:i:6:p:911-:d:366937
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2227-7390/8/6/911/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2227-7390/8/6/911/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Ouyang, Liang-Yuh & Chang, Hung-Chi, 2002. "A minimax distribution free procedure for mixed inventory models involving variable lead time with fuzzy lost sales," International Journal of Production Economics, Elsevier, vol. 76(1), pages 1-12, March.
    2. Huang, Chao-Kuei, 2004. "An optimal policy for a single-vendor single-buyer integrated production-inventory problem with process unreliability consideration," International Journal of Production Economics, Elsevier, vol. 91(1), pages 91-98, September.
    3. Lu, Lu, 1995. "A one-vendor multi-buyer integrated inventory model," European Journal of Operational Research, Elsevier, vol. 81(2), pages 312-323, March.
    4. Glock, C. H., 2012. "Lead time reduction strategies in a single-vendor-single-buyer integrated inventory model with lot size-dependent lead times and stochastic demand," Publications of Darmstadt Technical University, Institute for Business Studies (BWL) 57816, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL).
    5. Ouyang, Liang-Yuh & Wu, Kun-Shan & Ho, Chia-Huei, 2004. "Integrated vendor-buyer cooperative models with stochastic demand in controllable lead time," International Journal of Production Economics, Elsevier, vol. 92(3), pages 255-266, December.
    6. Shibaji Panda & Subrata Saha, 2010. "Optimal production rate and production stopping time for perishable seasonal products with ramp-type time-dependent demand," International Journal of Mathematics in Operational Research, Inderscience Enterprises Ltd, vol. 2(6), pages 657-673.
    7. Naoufel Cheikhrouhou & Biswajit Sarkar & Baishakhi Ganguly & Asif Iqbal Malik & Rafael Batista & Young Hae Lee, 2018. "Optimization of sample size and order size in an inventory model with quality inspection and return of defective items," Annals of Operations Research, Springer, vol. 271(2), pages 445-467, December.
    8. Ji Seong Noh & Jong Soo Kim & Biswajit Sarkar, 2019. "Stochastic joint replenishment problem with quantity discounts and minimum order constraints," Operational Research, Springer, vol. 19(1), pages 151-178, March.
    9. Sarkar, Biswajit & Saren, Sharmila, 2016. "Product inspection policy for an imperfect production system with inspection errors and warranty cost," European Journal of Operational Research, Elsevier, vol. 248(1), pages 263-271.
    10. Yosef Daryanto & Hui Ming Wee & Gede Agus Widyadana, 2019. "Low Carbon Supply Chain Coordination for Imperfect Quality Deteriorating Items," Mathematics, MDPI, vol. 7(3), pages 1-24, March.
    11. Glock, Christoph H., 2012. "Lead time reduction strategies in a single-vendor–single-buyer integrated inventory model with lot size-dependent lead times and stochastic demand," International Journal of Production Economics, Elsevier, vol. 136(1), pages 37-44.
    12. Wee, Hui Ming & Widyadana, Gede Agus, 2013. "Single-vendor single-buyer inventory model with discrete delivery order, random machine unavailability time and lost sales," International Journal of Production Economics, Elsevier, vol. 143(2), pages 574-579.
    13. Glock, C. H., 2012. "The joint economic lot size problem: a review," Publications of Darmstadt Technical University, Institute for Business Studies (BWL) 57811, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL).
    14. Glock, C. H., 2011. "Batch sizing with controllable production rates in a multi-stage production system," Publications of Darmstadt Technical University, Institute for Business Studies (BWL) 57822, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL).
    15. Bouslah, Bassem & Gharbi, Ali & Pellerin, Robert, 2013. "Joint optimal lot sizing and production control policy in an unreliable and imperfect manufacturing system," International Journal of Production Economics, Elsevier, vol. 144(1), pages 143-156.
    16. Kunter, Marcus, 2012. "Coordination via cost and revenue sharing in manufacturer–retailer channels," European Journal of Operational Research, Elsevier, vol. 216(2), pages 477-486.
    17. Arshinder & Kanda, Arun & Deshmukh, S.G., 2008. "Supply chain coordination: Perspectives, empirical studies and research directions," International Journal of Production Economics, Elsevier, vol. 115(2), pages 316-335, October.
    18. Glock, Christoph H., 2012. "The joint economic lot size problem: A review," International Journal of Production Economics, Elsevier, vol. 135(2), pages 671-686.
    19. Saha, S. & Goyal, S.K., 2015. "Supply chain coordination contracts with inventory level and retail price dependent demand," International Journal of Production Economics, Elsevier, vol. 161(C), pages 140-152.
    20. Glock, C. H., 2010. "Batch sizing with controllable production rates," Publications of Darmstadt Technical University, Institute for Business Studies (BWL) 57823, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL).
    21. Nash, John, 1950. "The Bargaining Problem," Econometrica, Econometric Society, vol. 18(2), pages 155-162, April.
    22. Glock, C. H. & Kim, T., 2012. "A joint economic lot sizemodel with returnable transport items," Publications of Darmstadt Technical University, Institute for Business Studies (BWL) 59079, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL).
    23. Heydari, Jafar, 2014. "Lead time variation control using reliable shipment equipment: An incentive scheme for supply chain coordination," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 63(C), pages 44-58.
    24. Ilkyeong Moon & Dong Kyoon Yoo & Subrata Saha, 2016. "The Distribution-Free Newsboy Problem with Multiple Discounts and Upgrades," Mathematical Problems in Engineering, Hindawi, vol. 2016, pages 1-11, August.
    25. Eiamkanchanalai, Somkiat & Banerjee, Avijit, 1999. "Production lot sizing with variable production rate and explicit idle capacity cost," International Journal of Production Economics, Elsevier, vol. 59(1-3), pages 251-259, March.
    26. Sarmah, S.P. & Acharya, D. & Goyal, S.K., 2006. "Buyer vendor coordination models in supply chain management," European Journal of Operational Research, Elsevier, vol. 175(1), pages 1-15, November.
    27. AlDurgam, Mohammad & Adegbola, Kehinde & Glock, Christoph H., 2017. "A single-vendor single-manufacturer integrated inventory model with stochastic demand and variable production rate," International Journal of Production Economics, Elsevier, vol. 191(C), pages 335-350.
    28. AlDurgham, M. & Adegbola, K. & Glock, C. H., 2017. "A single-vendor single-manufacturer integrated inventory model with stochastic demand and variable production rate," Publications of Darmstadt Technical University, Institute for Business Studies (BWL) 87594, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL).
    29. John C. Harsanyi & Reinhard Selten, 1972. "A Generalized Nash Solution for Two-Person Bargaining Games with Incomplete Information," Management Science, INFORMS, vol. 18(5-Part-2), pages 80-106, January.
    30. Evan L. Porteus, 1986. "Optimal Lot Sizing, Process Quality Improvement and Setup Cost Reduction," Operations Research, INFORMS, vol. 34(1), pages 137-144, February.
    31. 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.
    32. Goyal, S. K., 1995. "A one-vendor multi-buyer integrated inventory model: A comment," European Journal of Operational Research, Elsevier, vol. 82(1), pages 209-210, April.
    33. Biswajit Sarkar, 2016. "Supply Chain Coordination with Variable Backorder, Inspections, and Discount Policy for Fixed Lifetime Products," Mathematical Problems in Engineering, Hindawi, vol. 2016, pages 1-14, February.
    34. Giri, B. C. & Yun, W. Y. & Dohi, T., 2005. "Optimal design of unreliable production-inventory systems with variable production rate," European Journal of Operational Research, Elsevier, vol. 162(2), pages 372-386, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Haider Ali & Reshma Nasreen & Neetu Arneja & Chandra K. Jaggi, 2023. "Optimization of a periodically assessing model with manageable lead time under SLC with back order rebate for deteriorating items," International Journal of System Assurance Engineering and Management, Springer;The Society for Reliability, Engineering Quality and Operations Management (SREQOM),India, and Division of Operation and Maintenance, Lulea University of Technology, Sweden, vol. 14(1), pages 241-266, February.
    2. Waseem Sajjad & Misbah Ullah & Razaullah Khan & Mubashir Hayat, 2022. "Developing a Comprehensive Shipment Policy through Modified EPQ Model Considering Process Imperfections, Transportation Cost, and Backorders," Logistics, MDPI, vol. 6(3), pages 1-20, June.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. AlDurgam, Mohammad & Adegbola, Kehinde & Glock, Christoph H., 2017. "A single-vendor single-manufacturer integrated inventory model with stochastic demand and variable production rate," International Journal of Production Economics, Elsevier, vol. 191(C), pages 335-350.
    2. Glock, Christoph H. & Grosse, Eric H., 2021. "The impact of controllable production rates on the performance of inventory systems: A systematic review of the literature," European Journal of Operational Research, Elsevier, vol. 288(3), pages 703-720.
    3. Dhahri, Akrem & Gharbi, Ali & Ouhimmou, Mustapha, 2022. "Integrated production-delivery control policy for an unreliable manufacturing system and multiple retailers," International Journal of Production Economics, Elsevier, vol. 245(C).
    4. Herbon, Avi & David, Israel, 2023. "Optimal manufacturer's cost sharing ratio, shipping policy and production rate – A two-echelon supply chain," Operations Research Perspectives, Elsevier, vol. 10(C).
    5. K. F. Mary Latha & M. Ganesh Kumar & R. Uthayakumar, 2021. "Two echelon economic lot sizing problems with geometric shipment policy backorder price discount and optimal investment to reduce ordering cost," OPSEARCH, Springer;Operational Research Society of India, vol. 58(4), pages 1133-1163, December.
    6. Faranak Emtehani & Nasim Nahavandi & Farimah Mokhatab Rafiei, 2021. "A joint inventory–finance model for coordinating a capital-constrained supply chain with financing limitations," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 7(1), pages 1-39, December.
    7. Wakhid Ahmad Jauhari & I Nyoman Pujawan & Mokh Suef, 2023. "Sustainable inventory management with hybrid production system and investment to reduce defects," Annals of Operations Research, Springer, vol. 324(1), pages 543-572, May.
    8. B.C. Giri & S. Sharma, 2014. "Lot sizing and unequal-sized shipment policy for an integrated production-inventory system," International Journal of Systems Science, Taylor & Francis Journals, vol. 45(5), pages 888-901, May.
    9. Chan, Chi Kin & Fang, Fei & Langevin, André, 2018. "Single-vendor multi-buyer supply chain coordination with stochastic demand," International Journal of Production Economics, Elsevier, vol. 206(C), pages 110-133.
    10. Sajadieh, Mohsen S. & Larsen, Christian, 2015. "A coordinated manufacturer-retailer model under stochastic demand and production rate," International Journal of Production Economics, Elsevier, vol. 168(C), pages 64-70.
    11. Tiwari, Sunil & Kazemi, Nima & Modak, Nikunja Mohan & Cárdenas-Barrón, Leopoldo Eduardo & Sarkar, Sumon, 2020. "The effect of human errors on an integrated stochastic supply chain model with setup cost reduction and backorder price discount," International Journal of Production Economics, Elsevier, vol. 226(C).
    12. Mehmood Khan & Matloub Hussain & Leopoldo Eduardo Cárdenas-Barrón, 2017. "Learning and screening errors in an EPQ inventory model for supply chains with stochastic lead time demands," International Journal of Production Research, Taylor & Francis Journals, vol. 55(16), pages 4816-4832, August.
    13. Ventura, José A. & Bunn, Kevin A. & Venegas, Bárbara B. & Duan, Lisha, 2021. "A coordination mechanism for supplier selection and order quantity allocation with price-sensitive demand and finite production rates," International Journal of Production Economics, Elsevier, vol. 233(C).
    14. Castellano, Davide & Gallo, Mosè & Grassi, Andrea & Santillo, Liberatina C., 2019. "The effect of GHG emissions on production, inventory replenishment and routing decisions in a single vendor-multiple buyers supply chain," International Journal of Production Economics, Elsevier, vol. 218(C), pages 30-42.
    15. Noblesse, Ann M. & Boute, Robert N. & Lambrecht, Marc R. & Van Houdt, Benny, 2014. "Lot sizing and lead time decisions in production/inventory systems," International Journal of Production Economics, Elsevier, vol. 155(C), pages 351-360.
    16. Herbon, Avi, 2020. "An approximated solution to the constrained integrated manufacturer-buyer supply problem," Operations Research Perspectives, Elsevier, vol. 7(C).
    17. Asif Iqbal Malik & Biswajit Sarkar, 2019. "Coordinating Supply-Chain Management under Stochastic Fuzzy Environment and Lead-Time Reduction," Mathematics, MDPI, vol. 7(5), pages 1-28, May.
    18. Anuraag Gutgutia & J. K. Jha, 2018. "A closed-form solution for the distribution free continuous review integrated inventory model," Operational Research, Springer, vol. 18(1), pages 159-186, April.
    19. Mohammed Alkahtani & Muhammad Omair & Qazi Salman Khalid & Ghulam Hussain & Imran Ahmad & Catalin Pruncu, 2021. "A COVID-19 Supply Chain Management Strategy Based on Variable Production under Uncertain Environment Conditions," IJERPH, MDPI, vol. 18(4), pages 1-23, February.
    20. Sarker, Bhaba R. & Rochanaluk, Ratkrit & Yi, Huizhi & Egbelu, Pius J., 2014. "An operational policy for a three-stage distributive supply chain system with retailers’ backorders," International Journal of Production Economics, Elsevier, vol. 156(C), pages 332-345.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jmathe:v:8:y:2020:i:6:p:911-:d:366937. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.