Supply Chain Coordination Models: A Literature Review

Abstract

Background/Objectives: The objective of the work carried out in this paper is to present the literature based on different Supply Chain (SC) coordination mechanisms. Also, it is intended to explore various coordination models proposed by various researchers from the literature. Methods/Statistical Analysis: The literature is reviewed by considering 142 articles published from 2000 to till date and classified as two-level models and three-level models. All these articles are further discussed based on few coordination mechanisms such as trade credit, quantity discounts, revenue sharing contract and information sharing. In addition, the literature is reviewed on Vendor Managed Inventory and price dependent demand variations and the coordination issues are discussed. Findings: From the findings of this research, it is observed that sufficient volume of papers reported the coordination mechanism in a two-level SC. The number of papers discussing three-level SC coordination is few in number. Especially, in the perspective of trade credit and quantity discount option, very few articles are reported discussing coordination in a three-level SC. Further, it is also found that most of the articles addressed the coordination mechanism incorporating ordering and carrying costs. Very few articles addressed the implications of transportation cost in SC coordination mechanism. Application/Improvement: From the outcomes of this work, it is observed that study of the effect of space cost and advertisement cost on SC performance is highly significant. The use of simulation is highly emphasized as the activities of SC are becoming highly dynamic and challenging with the ever growing global competition.