Abstract
Supply chain management (SCM) has shown to be a successful strategy to manage the flow of goods, materials, information and services between multiple entities in one organization or multiple businesses working together to provide final customers with final products or services with the objective of improving and enhancing the performance of the chain and maximizing its profit. Inventory management (IM) is one element of the SCM that has shown researchers’ interests as it plays a major role in increasing supply chain profits and satisfying customers. Different coordination mechanisms have been developed to improve the collaboration and the integration of supply chain players. Consignment stock (CS) is one of the coordination mechanisms that is extensively studied by researchers to reflect its benefits, drawbacks, and the proper techniques of implementing it between two or more players in the chain. The studies of the CS still have some gaps that can be covered by researchers such as studying its effect in a three-level supply chain or when a delay-in-payment exists. Optimizing the number of payments or studying a three-level supply chain system with multiple suppliers and multiple buyers has not been developed. This thesis covers these gaps and considers different scenarios where a CS, a traditional policy (TP) or a combination between both of them might exist in case a system consists of three players. The main findings are optimizing the number of payments and incorporating a delay-in-payment increase the profit of the chain. In addition, a combination of a TP between the upstream players and a CS between the downstream players has shown to be better than adopting the same policy between all players. Some results of adopting a CS by all players have shown to be very close to the best scenario which could be the best option when demands highly fluctuate.
Highlights
This chapter aimed at investigating the effects of different payment schemes on the total profit of a two-level supply chain system when the consignment stock (CS) agreement is adopted as a coordination mechanism
This helps in increasing the profit of the system, especially the buyer by giving it more time to invest the money that is generated from selling the products before paying the vendor and make more profits
As the CS always increases the buyer’s total cost, the holding cost, allowing it to invest the money before paying for the used/withdrawn items helps in covering some of the expenses, which are caused by adopting this type of agreement
Summary
Increasing the competition in the market has forced researchers and managers to study and develop new strategies and mechanisms to improve the performance of companies and satisfy customers. Some of these studies focus on improving the internal strategy of the companies where others try to improve the external one to have a strong integrated system. One of these strategies is the Supply Chain Management (SCM), which usually helps in minimizing costs or maximizing profits of the individual organization as well as the whole supply chain system. There are different SCM definitions in the literature, all of them cover the main ideas of this topic, which are managing information, goods and financial flow between different parties in the chain to enhance the collaboration as well as the coordination in order to optimize the system and minimize the cost (see for intense Ballou et al, 2000 and Mentzer et al, 2001)
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have