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A generalized algebraic model for optimizing inventory decisions in a centralized or decentralized multi-stage multi-firm supply chain


  • Francis Leung, Kit Nam


First of all, a number of integrated models with/without lot streaming under the integer multiplier coordination mechanism is generalized by allowing lot streaming and three types of inspection for some/all upstream firms. Secondly, the optimal solutions to the three- and four-stage models are individually derived, both using the perfect squares method, which is a simple algebraic approach so that ordinary readers unfamiliar with differential calculus can easily understand how to obtain the optimal solution procedures. Thirdly, optimal expressions for some well-known models are deduced. Fourthly, expressions for sharing the coordination benefits based on Goyal's (1976) scheme are derived, and a further sharing scheme is introduced. Fifthly, two numerical examples for illustrative purposes are presented. Finally, some future research works involving extension or modification of the generalized model are suggested.

Suggested Citation

  • Francis Leung, Kit Nam, 2010. "A generalized algebraic model for optimizing inventory decisions in a centralized or decentralized multi-stage multi-firm supply chain," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 46(6), pages 896-912, November.
  • Handle: RePEc:eee:transe:v:46:y:2010:i:6:p:896-912

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