IDEAS home Printed from https://ideas.repec.org/a/spr/annopr/v315y2022i2d10.1007_s10479-021-04121-0.html
   My bibliography  Save this article

A combined approach for modeling multi-echelon multi-period decentralized supply chain

Author

Listed:
  • Marjia Haque

    (University of New South Wales)

  • Sanjoy Kumar Paul

    (University of Technology Sydney)

  • Ruhul Sarker

    (University of New South Wales)

  • Daryl Essam

    (University of New South Wales)

Abstract

In this paper, a multi-echelon, multi-period, decentralized supply chain (SC) with a single manufacturer, single distributor and single retailer is considered. For this setting, a two-phase planning approach combining centralized and decentralized decision-making processes is proposed, in which the first-phase planning is a coordinated centralized controlled, and the second-phase planning is viewed as independent decentralized decision-making for individual entities. This research focuses on the independence and equally powerful behavior of the individual entities with the aim of achieving the maximum profit for each stage. A mathematical model for total SC coordination as a first-phase planning problem and separate ones for each of the independent members with their individual objectives and constraints as second-phase planning problems are developed. We introduce a new solution approach using a goal programming technique in which a target or goal value is set for each independent decision problem to ensure that it obtains a near value for its individual optimum profit, with a numerical analysis presented to explain the results. Moreover, the proposed two-phase model is compared with a single-phase approach in which all stages are considered dependent on each other as parts of a centralized SC. The results prove that the combined two-phase planning method for a decentralized SC network is more realistic and effective than a traditional single-phase one.

Suggested Citation

  • Marjia Haque & Sanjoy Kumar Paul & Ruhul Sarker & Daryl Essam, 2022. "A combined approach for modeling multi-echelon multi-period decentralized supply chain," Annals of Operations Research, Springer, vol. 315(2), pages 1665-1702, August.
    • Handle: RePEc:spr:annopr:v:315:y:2022:i:2:d:10.1007_s10479-021-04121-0
    DOI: 10.1007/s10479-021-04121-0
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s10479-021-04121-0
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s10479-021-04121-0?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    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. Li, Sijie & Zhu, Zhanbei & Huang, Lihua, 2009. "Supply chain coordination and decision making under consignment contract with revenue sharing," International Journal of Production Economics, Elsevier, vol. 120(1), pages 88-99, July.
    2. Geng, Wei & Qiu, Minmin & Zhao, Xiaobo, 2010. "An inventory system with single distributor and multiple retailers: Operating scenarios and performance comparison," International Journal of Production Economics, Elsevier, vol. 128(1), pages 434-444, November.
    3. SeyedEsfahani, Mir Mehdi & Biazaran, Maryam & Gharakhani, Mohsen, 2011. "A game theoretic approach to coordinate pricing and vertical co-op advertising in manufacturer-retailer supply chains," European Journal of Operational Research, Elsevier, vol. 211(2), pages 263-273, June.
    4. Cao, Dong & Chen, Mingyuan, 2006. "Capacitated plant selection in a decentralized manufacturing environment: A bilevel optimization approach," European Journal of Operational Research, Elsevier, vol. 169(1), pages 97-110, February.
    5. Amir Mohammad Fathollahi-Fard & Abbas Ahmadi & Seyed Mohammad Javad Mirzapour Al-E-Hashem, 2020. "Sustainable closed-loop supply chain network for an integrated water supply and wastewater collection system under uncertainty," Post-Print hal-03004754, HAL.
    6. Zied Jemai & Fikri Karaesmen, 2007. "Decentralized inventory control in a two-stage capacitated supply chain," Post-Print hal-01672401, HAL.
    7. Duan, Qinglin & Warren Liao, T., 2013. "Optimization of replenishment policies for decentralized and centralized capacitated supply chains under various demands," International Journal of Production Economics, Elsevier, vol. 142(1), pages 194-204.
    8. Qu, T. & Huang, George Q. & Zhang, Yingfeng & Dai, Q.Y., 2010. "A generic analytical target cascading optimization system for decentralized supply chain configuration over supply chain grid," International Journal of Production Economics, Elsevier, vol. 127(2), pages 262-277, October.
    9. 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.
    10. Hau Lee & Seungjin Whang, 1999. "Decentralized Multi-Echelon Supply Chains: Incentives and Information," Management Science, INFORMS, vol. 45(5), pages 633-640, May.
    11. Ata Allah Taleizadeh & Mahsa Noori-daryan & Kannan Govindan, 2016. "Pricing and ordering decisions of two competing supply chains with different composite policies: a Stackelberg game-theoretic approach," International Journal of Production Research, Taylor & Francis Journals, vol. 54(9), pages 2807-2836, May.
    12. Mirzapour Al-e-hashem, S.M.J. & Baboli, A. & Sazvar, Z., 2013. "A stochastic aggregate production planning model in a green supply chain: Considering flexible lead times, nonlinear purchase and shortage cost functions," European Journal of Operational Research, Elsevier, vol. 230(1), pages 26-41.
    13. Li, Xiaoming, 2010. "Optimal inventory policies in decentralized supply chains," International Journal of Production Economics, Elsevier, vol. 128(1), pages 303-309, November.
    14. Glock, C. H. & Rekik, Y. & Ries, J. M., 2020. "A coordination mechanism for supply chains with capacity expansions and order-dependent lead times," Publications of Darmstadt Technical University, Institute for Business Studies (BWL) 118935, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL).
    15. Glock, Christoph H. & Rekik, Yacine & Ries, Jörg M., 2020. "A coordination mechanism for supply chains with capacity expansions and order-dependent lead times," European Journal of Operational Research, Elsevier, vol. 285(1), pages 247-262.
    16. Wang, Hongwei & Guo, Min & Efstathiou, Janet, 2004. "A game-theoretical cooperative mechanism design for a two-echelon decentralized supply chain," European Journal of Operational Research, Elsevier, vol. 157(2), pages 372-388, September.
    17. Biswajit Sarkar & Sharmila Saren & Mitali Sarkar & Yong Won Seo, 2016. "A Stackelberg Game Approach in an Integrated Inventory Model with Carbon-Emission and Setup Cost Reduction," Sustainability, MDPI, vol. 8(12), pages 1-23, December.
    18. 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.
    19. Nagurney, Anna & Dong, June & Zhang, Ding, 2002. "A supply chain network equilibrium model," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 38(5), pages 281-303, September.
    20. Calvete, Herminia I. & Galé, Carmen & Iranzo, José A., 2014. "Planning of a decentralized distribution network using bilevel optimization," Omega, Elsevier, vol. 49(C), pages 30-41.
    21. Yu, Yugang & Chu, Feng & Chen, Haoxun, 2009. "A Stackelberg game and its improvement in a VMI system with a manufacturing vendor," European Journal of Operational Research, Elsevier, vol. 192(3), pages 929-948, February.
    22. Li, Xiuhui & Wang, Qinan, 2007. "Coordination mechanisms of supply chain systems," European Journal of Operational Research, Elsevier, vol. 179(1), pages 1-16, May.
    23. Seyed Mohammad Javad Mirzapour Al-E-Hashem & Armand Baboli & Z. Sazvar, 2013. "A stochastic aggregate production planning model in a green supply chain : Considering flexible lead times, nonlinear purchase and shortage cost functions," Post-Print hal-02313031, HAL.
    24. Changchun Liu & Xi Xiang & Li Zheng, 2020. "Value of information sharing in a multiple producers–distributor supply chain," Annals of Operations Research, Springer, vol. 285(1), pages 121-148, February.
    25. 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.
    26. G. Rius-Sorolla & J. Maheut & S. Estellés-Miguel & J. P. Garcia-Sabater, 2020. "Coordination mechanisms with mathematical programming models for decentralized decision-making: a literature review," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 28(1), pages 61-104, March.
    Full references (including those not matched with items on IDEAS)

    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. Duan, Qinglin & Warren Liao, T., 2013. "Optimization of replenishment policies for decentralized and centralized capacitated supply chains under various demands," International Journal of Production Economics, Elsevier, vol. 142(1), pages 194-204.
    2. Egri, Péter & Váncza, József, 2013. "A distributed coordination mechanism for supply networks with asymmetric information," European Journal of Operational Research, Elsevier, vol. 226(3), pages 452-460.
    3. Zhai, Yue & Cheng, T.C.E., 2022. "Lead-time quotation and hedging coordination in make-to-order supply chain," European Journal of Operational Research, Elsevier, vol. 300(2), pages 449-460.
    4. Ata Allah Taleizadeh & Masoumeh Sadat Babaei & Seyed Taghi Akhavan Niaki & Mahsa Noori-daryan, 2020. "Bundle pricing and inventory decisions on complementary products," Operational Research, Springer, vol. 20(2), pages 517-541, June.
    5. Acar, Yavuz & Atadeniz, Sukran Nilvana, 2015. "Comparison of integrated and local planning approaches for the supply network of a globally-dispersed enterprise," International Journal of Production Economics, Elsevier, vol. 167(C), pages 204-219.
    6. Preil, Deniz & Krapp, Michael, 2022. "Bandit-based inventory optimisation: Reinforcement learning in multi-echelon supply chains," International Journal of Production Economics, Elsevier, vol. 252(C).
    7. Sher, Mikhail M. & Kim, Seung-Lae & Banerjee, Avijit & Paz, Michael T., 2018. "A supply chain coordination mechanism for common items subject to failure in the electronics, defense, and medical industries," International Journal of Production Economics, Elsevier, vol. 203(C), pages 164-173.
    8. Ramanathan, Usha & Muyldermans, Luc, 2010. "Identifying demand factors for promotional planning and forecasting: A case of a soft drink company in the UK," International Journal of Production Economics, Elsevier, vol. 128(2), pages 538-545, December.
    9. Ameknassi, Lhoussaine & Aït-Kadi, Daoud & Rezg, Nidhal, 2016. "Integration of logistics outsourcing decisions in a green supply chain design: A stochastic multi-objective multi-period multi-product programming model," International Journal of Production Economics, Elsevier, vol. 182(C), pages 165-184.
    10. Michael Krapp & Johannes B. Kraus, 2019. "Coordination contracts for reverse supply chains: a state-of-the-art review," Journal of Business Economics, Springer, vol. 89(7), pages 747-792, September.
    11. Wei Xu & Dong-Ping Song, 2022. "Integrated optimisation for production capacity, raw material ordering and production planning under time and quantity uncertainties based on two case studies," Operational Research, Springer, vol. 22(3), pages 2343-2371, July.
    12. Faranak Emtehani & Nasim Nahavandi & Farimah Mokhatab Rafiei, 2023. "Trade credit financing for supply chain coordination under financial challenges: a multi-leader–follower game approach," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 9(1), pages 1-39, December.
    13. 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.
    14. Sarker, Bhaba R., 2014. "Consignment stocking policy models for supply chain systems: A critical review and comparative perspectives," International Journal of Production Economics, Elsevier, vol. 155(C), pages 52-67.
    15. Babazadeh, Reza & Razmi, Jafar & Pishvaee, Mir Saman & Rabbani, Masoud, 2017. "A sustainable second-generation biodiesel supply chain network design problem under risk," Omega, Elsevier, vol. 66(PB), pages 258-277.
    16. Sumon Sarkar & Bibhas C. Giri, 2022. "Safety stock management in a supply chain model with waiting time and price discount dependent backlogging rate in stochastic environment," Operational Research, Springer, vol. 22(2), pages 917-946, April.
    17. Christian Wankmüller & Gerald Reiner, 2020. "Coordination, cooperation and collaboration in relief supply chain management," Journal of Business Economics, Springer, vol. 90(2), pages 239-276, March.
    18. Donya Rahmani & Arash Zandi & Sara Behdad & Arezou Entezaminia, 2021. "A light robust model for aggregate production planning with consideration of environmental impacts of machines," Operational Research, Springer, vol. 21(1), pages 273-297, March.
    19. Farnaz Barzinpour & Peyman Taki, 2018. "A dual-channel network design model in a green supply chain considering pricing and transportation mode choice," Journal of Intelligent Manufacturing, Springer, vol. 29(7), pages 1465-1483, October.
    20. Cai, Jianhu & Hu, Xiaoqing & Tadikamalla, Pandu R. & Shang, Jennifer, 2017. "Flexible contract design for VMI supply chain with service-sensitive demand: Revenue-sharing and supplier subsidy," European Journal of Operational Research, Elsevier, vol. 261(1), pages 143-153.

    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:spr:annopr:v:315:y:2022:i:2:d:10.1007_s10479-021-04121-0. 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: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.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.