Abstract
In this article, we design a revenue-sharing contract to coordinate inventory control decisions in a serial supply chain consisting of one supplier, one vendor, and one retailer. We assume that the...
Highlights
Introduction and literature reviewInteraction between supply chain members has been extensively discussed before
Using Theorems 1, 2, and 3, we have developed an enumerative algorithm to find the optimal inventory policy for the supply chain participating in centralized control policy
In Theorem 8, we have shown that the equilibrium of the revenue sharing contract for vendor managed inventory (VMI) program, which minimizes the cost of both parties, is the optimal inventory policy of the centralized supply chain regardless of the value of φ
Summary
(1) The fixed ordering cost is zero or negligible at the retailor. (2) The demand process is Poisson and unsatisfied demands will be lost at the retailer. (3) The replenishment lead time is constant both at the retailer and the vendor. (4) The transportation time of each order placed by the retailer is assumed to be constant. (5) Shortage is not allowed for the vendor. (6) The transportation time from the supplier to the vendor is constant and the supplier has enough stock that would never face shortages. (1) The fixed ordering cost is zero or negligible at the retailor. (2) The demand process is Poisson and unsatisfied demands will be lost at the retailer. (3) The replenishment lead time is constant both at the retailer and the vendor. (4) The transportation time of each order placed by the retailer is assumed to be constant. (5) Shortage is not allowed for the vendor. (6) The transportation time from the supplier to the vendor is constant and the supplier has enough stock that would never face shortages. To satisfy the retailer’s demand, the vendor should determine times and quantities of his orders to supplier in a way that the retailer’s demand is satisfied on time and his total inventory cost is minimized. Because the vendor is responsible for supply chain inventory levels and incurs the related costs from the fluctuations of these levels, the vendor decides about the inventory policy of the supply chain
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