Coordination in the supply chain considering total lead times and delivery times

Abstract

This study considers a two-echelon supply chain (SC) consisting of a single vendor and a single buyer by reducing delivery time. This paper examines delivery time optimization as an essential component of lead times. The length of delivery time and production time are studied simultaneously. The delivery time as a decision variable is considered in the proposed model. Reducing delivery time is considered a vital incentive factor in encouraging the buyer to participate in the coordinated model to guarantee profitability. A suggested mathematical model consisting of the profit functions of both participants (i.e., vendor and buyer) are investigated under two decision-making scenarios: the decentralized decision structure and coordinated decision structure. The analyses show that our proposed model ensures better performance for both participants and makes the whole process more profitable by an adequate sharing of risks between two participants. In other words, under the coordinated model, decreasing the delivery time and buyer's shortage costs and increasing the order quantity leads to an increase in the profit of the vendor and buyer.