Abstract
1. Logistics Systems Dynamics Group, Cardiff Business School, Cardiff University, Aberconway Building, Colum Drive, Cardiff, CF10 3EU, UK. E-mail: disneysm@cardiff.ac.uk, scottd1@cardiff.ac.uk (D.R. Towill) 2. Department of Applied Economics, Katholieke Universiteit Leuven, Naamsestraat 69, B3000 Leuven, Belgium. E-mail: marc.lambrecht@econ.kuleuven.ac.be 3. Procter and Gamble Services Company NV, Temselaan 100, B-1853 Strombeek-Bever, Belgium. E-mail: vandevelde.wm@pg.com ___________________________________________________________ We study a coordination scheme in a two echelon supply chain. It involves sharing details of replenishment rules, lead-times, demand patterns and tuning the replenishment rules to exploit the supply chain’s cost structure. We examine four different coordination strategies; naive operation, local optimisation, global optimisation and altruistic behaviour on behalf of the retailer. We assume the retailer and the manufacturer use the Order-Up-To policy to determine replenishment orders and end consumers demand is a stationary i.i.d. random variable. We derive the variance of the retailer’s order rate and inventory levels and the variance of the manufacturer’s order rate and inventory levels. We initially assume that costs in the supply chain are directly proportional to these variances (and later the standard deviations) and investigate the options available to the supply chain members for minimising costs. Our results show that if the retailer takes responsibility for supply chain cost reduction and acts altruistically by dampening his order variability, then the performance enhancement is robust to both the actual costs in the supply chain and to a naive or uncooperative manufacturer. Superior performance is achievable if firms coordinate their actions and if they find ways to re-allocate the supply chain gain. Keywords. Supply chains; Bullwhip; Inventory variance; Local optimisation, Global optimisation
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
