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How information influences the cost of transport in a supply chain, a monte carlo simulation

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Author Info

  • Xavier Brusset

    (IAG, Université Catholique de Louvain, Louvain la Neuve, Belgium)

Abstract

The present paper studies the impact of information sharing and contractual instruments on a shipper and her transport suppliers through a monte carlo simulation. After reviewing the literature, we propose a model to measure the benefits in terms of expected transport cost and variance of this cost. We evaluate three scenarios over a reiterated- single period setting in a shipper carrier single-echelon model with a mix of long-term and short-term procurement strategies: perfect information, asymmetric information and private information at one level of the supply chain. After spelling out the optimal parameters for the procurement policy, we evaluate the rent transfer between carrier and shipper in a numeric example using the monte-carlo method.

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File URL: http://128.118.178.162/eps/em/papers/0512/0512008.pdf
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Bibliographic Info

Paper provided by EconWPA in its series Econometrics with number 0512008.

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Length: 49 pages
Date of creation: 07 Dec 2005
Date of revision:
Handle: RePEc:wpa:wuwpem:0512008

Note: Type of Document - pdf; pages: 49. A monte carlo simulation to show the importance of asymetrical information in transport cost and distribution of this cost between a shipper and a carrier.
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Web page: http://128.118.178.162

Related research

Keywords: supply chain management; transport; contract; monte carlo; bivariate normal distribution; information;

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References

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  1. A. A. Tsay & W. S. Lovejoy, 1999. "Quantity Flexibility Contracts and Supply Chain Performance," Manufacturing & Service Operations Management, INFORMS, vol. 1(2), pages 89-111.
  2. Seifert, Ralf W. & Thonemann, Ulrich W. & Hausman, Warren H., 2004. "Optimal procurement strategies for online spot markets," European Journal of Operational Research, Elsevier, vol. 152(3), pages 781-799, February.
  3. Bryan Routledge & Duane Seppi & Chester Spatt, . "Equilibrium Forward Curves for Commodities," GSIA Working Papers 1997-49, Carnegie Mellon University, Tepper School of Business.
  4. Grieger, Martin, 2003. "Electronic marketplaces: A literature review and a call for supply chain management research," European Journal of Operational Research, Elsevier, vol. 144(2), pages 280-294, January.
  5. Wu, D. J. & Kleindorfer, P. R. & Zhang, Jin E., 2002. "Optimal bidding and contracting strategies for capital-intensive goods," European Journal of Operational Research, Elsevier, vol. 137(3), pages 657-676, March.
  6. Gérard P. Cachon & Martin A. Lariviere, 2001. "Contracting to Assure Supply: How to Share Demand Forecasts in a Supply Chain," Management Science, INFORMS, vol. 47(5), pages 629-646, May.
  7. Gérard P. Cachon & Paul H. Zipkin, 1999. "Competitive and Cooperative Inventory Policies in a Two-Stage Supply Chain," Management Science, INFORMS, vol. 45(7), pages 936-953, July.
  8. Andy A. Tsay, 1999. "The Quantity Flexibility Contract and Supplier-Customer Incentives," Management Science, INFORMS, vol. 45(10), pages 1339-1358, October.
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