IDEAS home Printed from https://ideas.repec.org/a/eee/proeco/v128y2010i1p3-10.html
   My bibliography  Save this article

Supply chain strategies based on recourse model for very short life cycle products

Author

Listed:
  • Patil, Rahul
  • Avittathur, Balram
  • Shah, Janat

Abstract

Firms that sell very short life cycle products often receive quantity discounts from their suppliers and transporters for placing larger orders. Practitioners and researchers have begun to recognize the need to decide the end of the season markdowns by studying the sales pattern. The use of these options can affect supply chain mismatch risks and costs. In this paper, we study the impact of quantity discounts and transportation cost structures on procurement, shipment and clearance pricing decisions through a stochastic programming with recourse formulation. We propose a solution procedure that efficiently solves this stochastic non-linear problem. Our computational experiments suggest that it is not always necessary to select the most complex action plan. Under some business environments, the conventional strategy of placing and transporting a single large order is a better option. We then identify situations where options such as markdowns and the use of quick response suppliers could be useful.

Suggested Citation

  • Patil, Rahul & Avittathur, Balram & Shah, Janat, 2010. "Supply chain strategies based on recourse model for very short life cycle products," International Journal of Production Economics, Elsevier, vol. 128(1), pages 3-10, November.
    • Handle: RePEc:eee:proeco:v:128:y:2010:i:1:p:3-10
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0925-5273(10)00042-3
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Khouja, Moutaz, 1999. "The single-period (news-vendor) problem: literature review and suggestions for future research," Omega, Elsevier, vol. 27(5), pages 537-553, October.
    2. Lin, Chen-Sin & Kroll, Dennis E., 1997. "The single-item newsboy problem with dual performance measures and quantity discounts," European Journal of Operational Research, Elsevier, vol. 100(3), pages 562-565, August.
    3. Marshall Fisher & Kumar Rajaram & Ananth Raman, 2001. "Optimizing Inventory Replenishment of Retail Fashion Products," Manufacturing & Service Operations Management, INFORMS, vol. 3(3), pages 230-241, November.
    4. Christian van Delft & A. Cheaitou y, 2009. "Two-period production planning and inventory control," Post-Print hal-00491696, HAL.
    5. Marshall Fisher & Ananth Raman, 1996. "Reducing the Cost of Demand Uncertainty Through Accurate Response to Early Sales," Operations Research, INFORMS, vol. 44(1), pages 87-99, February.
    6. Gérard P. Cachon & A. Gürhan Kök, 2007. "Implementation of the Newsvendor Model with Clearance Pricing: How to (and How Not to) Estimate a Salvage Value," Manufacturing & Service Operations Management, INFORMS, vol. 9(3), pages 276-290, October.
    7. Cattani, Kyle D. & Dahan, Ely & Schmidt, Glen M., 2008. "Tailored capacity: Speculative and reactive fabrication of fashion goods," International Journal of Production Economics, Elsevier, vol. 114(2), pages 416-430, August.
    8. Douglas A. Popken, 1994. "An Algorithm for the Multiattribute, Multicommodity Flow Problem with Freight Consolidation and Inventory Costs," Operations Research, INFORMS, vol. 42(2), pages 274-286, April.
    9. Cantamessa, Marco & Valentini, Carlo, 2000. "Planning and managing manufacturing capacity when demand is subject to diffusion effects," International Journal of Production Economics, Elsevier, vol. 66(3), pages 227-240, July.
    10. Christian van Delft & Ali Cheaitoua & Yves Dallery & Z. Jemai, 2009. "Two-period production planning and inventory control," Post-Print hal-00471430, HAL.
    11. Sen, Alper, 2008. "The US fashion industry: A supply chain review," International Journal of Production Economics, Elsevier, vol. 114(2), pages 571-593, August.
    12. Cheaitou, Ali & van Delft, Christian & Dallery, Yves & Jemai, Zied, 2009. "Two-period production planning and inventory control," International Journal of Production Economics, Elsevier, vol. 118(1), pages 118-130, March.
    13. Jian Li & Suresh Chand & Maqbool Dada & Shailendra Mehta, 2009. "Managing Inventory Over a Short Season: Models with Two Procurement Opportunities," Manufacturing & Service Operations Management, INFORMS, vol. 11(1), pages 174-184, April.
    14. T-M Choi & D Li & H Yan, 2003. "Optimal two-stage ordering policy with Bayesian information updating," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 54(8), pages 846-859, August.
    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. Green, Kenneth W. & Inman, R.Anthony & Birou, Laura M. & Whitten, Dwayne, 2014. "Total JIT (T-JIT) and its impact on supply chain competency and organizational performance," International Journal of Production Economics, Elsevier, vol. 147(PA), pages 125-135.
    2. Perez-Franco, R. & Phadnis, S. & Caplice, C. & Sheffi, Y., 2016. "Rethinking supply chain strategy as a conceptual system," International Journal of Production Economics, Elsevier, vol. 182(C), pages 384-396.
    3. Shen, Bin & Xu, Xiaoyan & Guo, Shu, 2019. "The impacts of logistics services on short life cycle products in a global supply chain," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 131(C), pages 153-167.
    4. Rina Tanaka & Aya Ishigaki & Tomomichi Suzuki & Masato Hamada & Wataru Kawai, 2019. "Data Analysis of Shipment for Textiles and Apparel from Logistics Warehouse to Store Considering Disposal Risk," Sustainability, MDPI, vol. 11(1), pages 1-14, January.
    5. Bhanuteja Sainathuni & Bradley Guthrie & Pratik J. Parikh & Nan Kong, 2019. "Distribution planning for products with varying life cycles," Flexible Services and Manufacturing Journal, Springer, vol. 31(1), pages 41-74, March.
    6. Bradley Guthrie & Pratik J. Parikh & Nan Kong, 2017. "Evaluating warehouse strategies for two-product class distribution planning," International Journal of Production Research, Taylor & Francis Journals, vol. 55(21), pages 6470-6484, November.

    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. Cheaitou, Ali & Cheaytou, Rima, 2019. "A two-stage capacity reservation supply contract with risky supplier and forecast updating," International Journal of Production Economics, Elsevier, vol. 209(C), pages 42-60.
    2. Patra, T. Devi Prasad & Jha, J.K., 2021. "A two-period newsvendor model for prepositioning with a post-disaster replenishment using Bayesian demand update," Socio-Economic Planning Sciences, Elsevier, vol. 78(C).
    3. Khouja, Moutaz & Zhou, Jing, 2017. "An off-price retailer with two ordering opportunities and demand updating," International Journal of Production Economics, Elsevier, vol. 188(C), pages 128-138.
    4. Cheaitou, Ali & van Delft, Christian & Jemai, Zied & Dallery, Yves, 2014. "Optimal policy structure characterization for a two-period dual-sourcing inventory control model with forecast updating," International Journal of Production Economics, Elsevier, vol. 157(C), pages 238-249.
    5. Yeu-Shiang Huang & Hau-Wen Lo & Jyh-Wen Ho, 2021. "Effects of component commonality and perishability on inventory control in assemble-to-order systems," Operational Research, Springer, vol. 21(1), pages 205-229, March.
    6. Cheaitou, Ali & van Delft, Christian & Dallery, Yves & Jemai, Zied, 2009. "Two-period production planning and inventory control," International Journal of Production Economics, Elsevier, vol. 118(1), pages 118-130, March.
    7. Xu, Qingyun & He, Yi & Shao, Zhen, 2023. "Retailer's ordering decisions with consumer panic buying under unexpected events," International Journal of Production Economics, Elsevier, vol. 266(C).
    8. Serel, Dogan A., 2009. "Optimal ordering and pricing in a quick response system," International Journal of Production Economics, Elsevier, vol. 121(2), pages 700-714, October.
    9. Reimann, Marc, 2011. "Speculative production and anticipative reservation of reactive capacity by a multi-product newsvendor," European Journal of Operational Research, Elsevier, vol. 211(1), pages 35-46, May.
    10. Dan A. Iancu & Nikolaos Trichakis & Gerry Tsoukalas, 2017. "Is Operating Flexibility Harmful Under Debt?," Management Science, INFORMS, vol. 63(6), pages 1730-1761, June.
    11. Gérard P. Cachon & Robert Swinney, 2009. "Purchasing, Pricing, and Quick Response in the Presence of Strategic Consumers," Management Science, INFORMS, vol. 55(3), pages 497-511, March.
    12. Serel, Doğan A., 2012. "Multi-item quick response system with budget constraint," International Journal of Production Economics, Elsevier, vol. 137(2), pages 235-249.
    13. Avittathur, Balram & Biswas, Indranil, 2017. "A note on limited clearance sale inventory model," International Journal of Production Economics, Elsevier, vol. 193(C), pages 647-653.
    14. Karakul, M., 2008. "Joint pricing and procurement of fashion products in the existence of clearance markets," International Journal of Production Economics, Elsevier, vol. 114(2), pages 487-506, August.
    15. Wei Pan & Ying Guo & Lei Jin & ShuJie Liao, 2017. "Medical resource inventory model for emergency preparation with uncertain demand and stochastic occurrence time under considering different risk preferences at the airport," PLOS ONE, Public Library of Science, vol. 12(9), pages 1-16, September.
    16. Jian Li & Suresh Chand & Maqbool Dada & Shailendra Mehta, 2009. "Managing Inventory Over a Short Season: Models with Two Procurement Opportunities," Manufacturing & Service Operations Management, INFORMS, vol. 11(1), pages 174-184, April.
    17. Sakaguchi, Michinori, 2009. "Inventory model for an inventory system with time-varying demand rate," International Journal of Production Economics, Elsevier, vol. 122(1), pages 269-275, November.
    18. Choi, Tsan-Ming & Chow, Pui-Sze, 2008. "Mean-variance analysis of Quick Response Program," International Journal of Production Economics, Elsevier, vol. 114(2), pages 456-475, August.
    19. Pinçe, Çerağ & Yücesan, Enver & Bhaskara, Prithveesha Govinda, 2021. "Accurate response in agricultural supply chains," Omega, Elsevier, vol. 100(C).
    20. Gah-Yi Ban & Jérémie Gallien & Adam J. Mersereau, 2019. "Dynamic Procurement of New Products with Covariate Information: The Residual Tree Method," Manufacturing & Service Operations Management, INFORMS, vol. 21(4), pages 798-815, October.

    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:eee:proeco:v:128:y:2010:i:1:p:3-10. 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: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/ijpe .

    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.