Abstract
This paper considers the collaborative mechanisms of the Supply-Hub in the Assemble-to-Order system (ATO system hereafter) with upstream delivery uncertainty. We first propose a collaborative replenishment mechanism in the ATO system, and construct a replenishment model with delivery uncertainty in use of the Supply-Hub. After transforming the original model into a one-dimensional optimization problem, we derive the optimal assembly quantity and reorder point of each component. In order to enable the Supply-Hub to conduct collaborative replenishment with each supplier, the punishment and reward mechanisms are proposed. The numerical analysis illustrates that service level of the Supply-Hub is an increasing function of both punishment and reward factors. Therefore, by adjusting the two factors, suppliers’ incentives of collaborative replenishment can be significantly enhanced, and then the service level of whole ATO system can be improved.
Highlights
The supply disruptions in ATO systems caused by upstream suppliers nowadays happen frequently due to the influences of natural disasters, strikes, terrorist attacks, political instability, and other factors
To address the gap between the practice and current literature, we investigate the interaction between delivery uncertainty and coordinative policy of the Supply-Hub and mainly address the following questions: (1) What are the optimal replenishment decisions for the Supply-Hub in ATO systems with multiple suppliers and one manufacturer in case of uncertain delivery time?
This paper constructs a collaborative replenishment model in the ATO system based on the Supply-Hub with delivery uncertainty
Summary
The supply disruptions in ATO systems caused by upstream suppliers nowadays happen frequently due to the influences of natural disasters, strikes, terrorist attacks, political instability, and other factors. Three major automakers in Japan, Toyota, Honda and Nissan, were affected by supply disruptions, and some Sino-Japanese joint ventures in China had different levels of supply disruptions Driven by these serious losses caused by supply uncertainty, both scholars and practitioners try to find out effective ways to improve ATO systems’ overall performances by handling upstream disruptions. Because there exist all sorts of problems in the distributed VMI operation mode, some advanced core manufacturers consider to manage independent warehouses in a centralized way instead of the original decentralized way through resources integration, organization reconstruction, and coordination optimization This helps to reduce the investment cost in fixed facilities, and can greatly reduce the operation and management cost of the whole supply chain. We apply the punishment and reward mechanisms to the SupplyHub for the purpose of coordinating suppliers and improving service level, and through theoretical and numerical analysis we find the relations between the two coordinative factors and service level
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