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A study on lead-time discount coordination for deteriorating products

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  • Huang, Yeu-Shiang
  • Su, Wei-Jun
  • Lin, Zu-Liang

Abstract

Goods flowing through supply chains usually deteriorate. Such goods may corrupt, volatilize, and degenerate over time and thus cause the decline of their values or quantity. This study focuses on lead-time coordination for supply chains with deteriorating products which facilitates member cooperation and long-time relationships, thus increasing profit for the entire supply chain. A two-level supply chain with a single supplier and a single retailer is considered, in which the product deteriorates in the same manner for both the supplier and retailer, which is allowed to have shortages. A lead-time discount coordination strategy is used to maximize the profit of the entire supply chain by appropriately determining the optimal order quantity and lead-time. A numerical example is given, and sensitivity analyses are performed to analyze the influence of various parameters on the overall profit. The results can help managers establish long-term cooperative relationships in supply chains.

Suggested Citation

  • Huang, Yeu-Shiang & Su, Wei-Jun & Lin, Zu-Liang, 2011. "A study on lead-time discount coordination for deteriorating products," European Journal of Operational Research, Elsevier, vol. 215(2), pages 358-366, December.
  • Handle: RePEc:eee:ejores:v:215:y:2011:i:2:p:358-366
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    References listed on IDEAS

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    Cited by:

    1. Chung, Wenming & Talluri, Srinivas & Narasimhan, Ram, 2015. "Optimal pricing and inventory strategies with multiple price markdowns over time," European Journal of Operational Research, Elsevier, vol. 243(1), pages 130-141.
    2. Tai, Allen H. & Xie, Yue & Ching, Wai-Ki, 2016. "Inspection policy for inventory system with deteriorating products," International Journal of Production Economics, Elsevier, vol. 173(C), pages 22-29.
    3. 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.
    4. Jian, Ming & Fang, Xin & Jin, Liu-qian & Rajapov, Azamat, 2015. "The impact of lead time compression on demand forecasting risk and production cost: A newsvendor model," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 84(C), pages 61-72.
    5. Mei, Wanxia & Du, Li & Niu, Baozhuang & Wang, Jincheng & Feng, Jiejian, 2016. "The effects of an undisclosed regular price and a positive leadtime in a presale mechanism," European Journal of Operational Research, Elsevier, vol. 250(3), pages 1013-1025.

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