Abstract
Generally, there are various elements of uncertainty in a supply chain. In particular, uncertainties in lead time, demand, and yield are very important in the semiconductor industry. Higher uncertainty can lead to bullwhip effects that can undermine the performance of the entire supply chain. This study examines the relationship between uncertainty in the supply chain and the outcome of inventory replenishment policies. Specifically, we analyze the effects of well-known uncertainties on manufacturer production quantity and retailer order quantity decisions in a decentralized supply chain. In addition, we also analyze and compare the effects of these uncertainties for the retailer-managed inventory and the vendor-managed inventory policies. Using numerical experiments, a comparative analysis of the two alternatives is conducted to determine suitable options for improving supply chain performance. In general, the performance of vendor-managed inventory is better than that of retailer-managed inventory, but we observe from the numerical experiments that there exist circumstances under which retailer-managed inventory shows better supply chain performance.
Highlights
Semiconductors are the core components of a variety of electronic devices, such as smartphones and tablet PCs
In this study, we examine models that analyze the impact of supply uncertainty in retailer-managed and vendor-managed decentralized supply chains on supply chain performance
For the retailer managed inventory (RMI) model, when yield is low, the retailer always attempts to order more than the optimal quantity, which might lead to the bullwhip effect
Summary
Semiconductors are the core components of a variety of electronic devices, such as smartphones and tablet PCs. Fry et al [29] analyzed a (Z, z)-type VMI contract between a single supplier and a single retailer in a supply chain, focusing on the behavior of the supplier and retailer under the VMI and RMI models They reported that the penalties for understocking for the supplier are not incurred immediately, but they do effect long-term performance. It is well-known that the VMI model is generally preferred to the RMI model for the supply chain as a whole, but no research has simultaneously investigated the benefits of the VMI model for various forms of uncertainty (yield, lead-time, demand, etc).
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