Supply chain inventory co-ordination through multiple, common replenishment epochs and selective discount

Abstract

We consider the problem of co-ordinating supply chain inventories through the use of multiple common replenishment epochs (MCREs), or time periods. A single-vendor, multiple-buyer supply chain for a single product is considered, where the vendor specifies two alternative common replenishment epochs. Buyers who replenish at integer multiples of one of the two common replenishment epochs receive a discount. Buyers do so if the discount is sufficient enough to make the switch from their optimal replenishment scheme economical. Our study shows that this voluntary MCRE strategy can enhance the vendor's profit considerably, compared with strategies that have previously been proposed.