Abstract
AbstractWe study strategies to manage demand disruptions in a three-tier electronics supply chain consisting of an Electronics Manufacturing Services provider, an Original Equipment Manufacturer (OEM), and a Retailer. We model price sensitivity of consumer demand with the two functions commonly used for this purpose, linear and exponential, and introduce disruptions in the demand function. We assume each supply chain member faces an increasing marginal unit cost function. Our decentralized supply chain setting is governed by a wholesale price contract. The OEM possesses greater bargaining power and therefore is the Stackelberg leader. A penalty cost incurred by the Retailer is introduced to capture the cost of deviation from the original plan. We find exact analytical solutions of the effectiveness of managing the disruption when the consumer demand function is linear, and we provide numerical examples as an illustration when the consumer demand function is either linear or exponential. We show that the o...
Highlights
CEOs and executives in the electronics industry are striving for global integration to a much greater extent than their peers in other industries (IBM Global Business Services, 2008)
We study management of demand disruptions in a three-tier electronics supply chain consisting of an Electronics Manufacturing Services (EMS) provider who builds the subassemblies, an Original Equipment Manufacturer (OEM) who integrates the subassemblies into the final product and performs system tests, and a Retailer who sells the product to the consumer
We have investigated disruption management in a two-period three-tier decentralized electronics supply chain consisting of an EMS, an OEM, and a Retailer
Summary
CEOs and executives in the electronics industry are striving for global integration to a much greater extent than their peers in other industries (IBM Global Business Services, 2008). We analyze the effects of the demand disruption on the optimal order quantity, retail price, and the supply chain profit relative to original plan. We have two cases with regard to the additive term in Equation (11): When this condition is true, Q* does not satisfy the constraint Q < q when Δa < 0 This implies that the original production plan should not be changed Q* = q* unless the magnitude of demand disruption is large enough (greater than b 2). The quantity sold is the same as the originally planned but the retail price should be decreased to achieve maximum profit (which is still less than the optimum profit in the linear demand function) When this condition is true, Q* satisfies the constraint Q < q when Δa < 0, implying that Π is maximized at Q*.
Sign-in/Register to view highlights & summary Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
