Abstract
Direct chain enterprises (DCEs) face a decision-making issue as to how to allocate and supply their products to their stores for sales with the minimum losses and maximum profits for the manufacturers. This paper presents a single-cycle optimal allocation model for DCEs under the given total production amount and conditional value at risk loss. The optimal strategy for production allocation and supply is derived. Subsequently, an approximate algorithm for solving the optimal total production amount is presented. The optimal allocation and supply strategy, the minimum total production amount, the minimum allocation strategy, and the discount pricing strategy are obtained for the single cycle. Finally, with the sales data of a food DCE, numerical results corroborate that adopting different production and supply strategies reduces the risk of expected losses and increases the expected return. It is of an important theoretical significance in guiding the production and operation of direct chain enterprises.
Highlights
A direct chain enterprise (DCE) is the one whose chain stores are directly operated by the head office of the Direct chain enterprises (DCEs); that is, the head office implements the unified management of its staff, finances, materials, business, logistics, and information flows for each of its chain stores
This paper presents a single-cycle optimal allocation model for DCEs under the given total production amount and conditional value at risk loss
A direct chain enterprise (DCE) is the one whose chain stores are directly operated by the head office of the DCE; that is, the head office implements the unified management of its staff, finances, materials, business, logistics, and information flows for each of its chain stores
Summary
A direct chain enterprise (DCE) is the one whose chain stores are directly operated by the head office of the DCE; that is, the head office implements the unified management of its staff, finances, materials, business, logistics, and information flows for each of its chain stores. Few theoretical researches on the production allocation and supply model for DCEs are available, there are similar studies on centralized inventory problem =for suppliers and retailers. The above literatures mainly considered newsboy models with orders from retailers to suppliers where wholesale prices apply These models are not suitable for production and supply decisionmaking problems of DCEs. DCEs must decide the product supply that should be distributed to their chain stores for sales, and it is their goals to achieve an expected sales the same as the production volume with a maximum total profit or a minimum loss, where wholesale prices and recovery price do not apply. Several studies on the previous newsboy models are order decision problems for single retailer, which are rarely in the DCEs. In recent year, market competition has been fierce, and product oversupply has been widespread.
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