Chain Profit Research Articles

Advertising games on national brand and store brand in a dual-channel supply chain

This paper investigates a dual-channel supply chain, where one national brand manufacturer has both online and retail channels. The retailer is assumed to sell the national brand as well as his store brand to customers. The following five scenarios are considered: Centralized case, Stackelberg-manufacturer (SM) game, Stackelberg-retailer (SR) game, Nash-manufacturer (NM) game and Nash-retailer (NR) game. The paper derives the conditions under which the supply chain members would like to participate in cooperative advertising. The results show that in the Stackelberg games, the leader in Stackelberg game will reduce its investment in cooperative advertising when it gets a lower marginal profit from the cooperative advertising; In addition, the dual-channel supply chain can get a higher profit if it is dominated by the member whose marginal profit from cooperative advertising is higher. In the Nash games, in order to increase the whole supply chain's profit, the member who has a higher marginal profit in the cooperative advertising should give up the decision power on cost-sharing rate voluntarily. In addition, if there exists a leader in the supply chain, the cooperative advertising will be higher. Furthermore, the introduction of store brand will trigger the manufacturer's antipathy for the low profit.

Study on Government Subsidy Decision-making of Straw Power Generation Supply Chain

Straw power generation is a good substitute for fuel coal power generation of power plant, but the shortage of straw resources supply severely restricts the development of straw power generation industry in China. To promote the development of straw power generation, the government needs to adopt fiscal subsidies to encourage members of the supply chain. To this end, this paper studies the decision-making of government subsidy on straw power generation supply chain. First, the influencing factors of farmers-brokers-power plants straw power generation supply chain are analyzed, and the dynamic game models of the supply chain under the government incentives are built. Second, the impacts of government subsidies on three members’ decision-making are analyzed. Then, under different incentive conditions, the changes of members’ profits and chain's profits are discussed. Finally, an example is used to show the supply chain in the straw power generation, which verifies the proposed models and analysis. And several suggestions from farmers, brokers and power plants aspects are put forward to establish long-term cooperative relationship in straw power generation supply chain.

A framework for evaluating the status of supply chain integration

Supply chain management (SCM) is among the most frequently discussed topics in the corporate world today. Constant efforts are being made to develop value-added processes that deliver innovative, high-quality, low-cost products on time with greater responsiveness than ever before. Supply chain integration plays an important role to achieve the same. Unfortunately, the SCM concept has not been implemented in totality and there is a huge disconnect between supplier and customer. Many issues need to be addressed to integrate the supply chains of many industries. But the first step is the recognition of the present status of integration so that false notions are removed and fruitful work starts towards better integration and thus higher supply chain (SC) profitability. The present work tries to find out the critical parameters related to supply chain integration, which if addressed properly can provide improvements in supply chain integration effectiveness. Thereafter, the study after establishing the comprehensive list of information that flows through a generic SC and identifying their impact on the SC cost. Finally, a framework has been articulated to enable an organisation to identify its state of supply chain integration.

Who canvasses for cargos? Incentive analysis and channel structure in a shipping supply chain

Ocean shipping (OS) and inland shipping (IS) are vertically complementary services in the shipping supply chain. In practice, we have observed that both OS and IS companies canvass for cargos. In addition, we have observed that more and more IS companies are forming alliances to obtain a better price from the OS companies by hiring a negotiation agent. We solve the strategy matrix based on the following questions: “Who canvasses for cargos?” “Should a negotiation agent be hired?” We find that when an OS company canvasses for cargos, a negotiation agent can raise the IS service price; however, when IS companies canvass for cargos, a negotiation agent can weaken an OS company's monopolistic advantage. We show that there exists a win–win situation when an OS company canvasses for cargos without a negotiation agent and that this win–win situation is Pareto-optimal for all shipping supply chain parties. Interestingly, by comparing the equilibriums under optimal strategies and equilibrium strategies, we identify a lose–lose situation. That is, a classic Prisoner's Dilemma occurs when IS companies canvass for cargos and a negotiation agent is hired. We find that the shipping supply chain's overall profit and social welfare are maximized when an OS company canvasses for cargos and IS companies do not hire a negotiation agent.

Resilient supply chain network design under competition: A case study

This research, motivated by a real-life case study in a highly competitive automobile supply chain, experimentally studies the impact of disruption on the competitiveness of supply chains. The studied supply chain faces two major risks: disruption of suppliers and tough competition from competitors. Any disruption in upstream level of the supply chain leads to an inability to meet demand downstream and causes market share to be lost to the competitors. For such a setting, a resilient topology is redesigned that can recover from and react quickly to any disruptive incidents. To this aim, we speculate there are three policies that can be used to mitigate the disruption risk, namely keeping emergency stock at the retailers, reserving back-up capacity at the suppliers, and multiple-sourcing. The problem is addressed using a mixed integer non-linear model to find the most profitable network and mitigation policies. We design a piecewise linear method to solve the model. Based on the data extracted from an automotive supply chain, practical insights of the research are extracted in a controlled experiment. Our analysis suggests that implementing risk mitigation policies not only work to the advantage of the supply chain by sustaining and improving its market share but also benefit customers by stabilizing retail prices in the market. Using the case study, we analyze the contribution of each risk strategy in stabilizing the supply chain's profit, market share, and retail price. Our analysis reveals that downstream “emergency stock” is the most preferable risk mitigation strategy if suppliers are unreliable.

Pricing decision for new and remanufactured product in a closed-loop supply chain with separate sales-channel

Remanufacturing is a recovery process that transforms a used product into a “like-new” product, which usually comes with a warranty similar to that of the new product. Many manufacturers are concerned that remanufacturing might cannibalize the new product's sales. Recent development shows an increasing trend in selling products through non-traditional channels, such as a manufacturer's direct channel or an e-channel. A pricing decision model is developed for short life-cycle products in a closed-loop supply chain that consists of the manufacturer, retailer, and collector. The new product is sold via traditional retail stores and the remanufactured product is sold via the manufacturer's direct channel. There are two scaling factors introduced in the model: (1) customer acceptance of buying a remanufactured product (reman-acceptance); (2) customer preference for buying a remanufactured product via a direct channel (direct-channel-preference). The results show that implementing a separate channel can improve the total supply chain's profit compared to the single-channel approach. It is also found that the two scaling factors influence both the pricing decisions and profits of supply-chain members.

Coordinating a Supply Chain When Facing Strategic Consumers

ABSTRACTThis article examines the impact of strategic consumers on the efficiency and coordination of a supply chain. We consider a supply chain consisting of a manufacturer and a newsvendor retailer selling a seasonal product to strategic consumers, who may choose to wait for clearance sales to maximize their intertemporal utility. Under a prenegotiated supply contract, the retailer chooses retail price and ordering quantity simultaneously. After that, the strategic consumers, who may be heterogeneous in their patience levels, make purchasing decisions. We find that strategic consumer behavior can hurt the supply chain efficiency due to severe double marginalization, and that a simple buyback contract can coordinate the supply chain. Nevertheless, we show that the supply chain does become more difficult to coordinate when strategic consumers are present: the set of buyback contractual terms that coordinate the chain shrinks as consumers are more willing to wait, and the chain profit cannot be arbitrarily allocated between the firms. Contrary to popular intuition, this result implies that the retailer may enjoy some benefit from consumers' strategic waiting. In addition, we find that the retailer's gain is the highest when impatient and patient consumers are comparably mixed in the population.

Optimal inventory control policy and supply chain coordination problem with carbon footprint constraints

AbstractCarbon footprint constraints exert pressure on supply chains to reexamine decisions. In this paper, we consider carbon transfer cost and carbon holding cost in a supply chain. A multiperiod dynamic programming model with carbon footprint constraints is presented to investigate the impact of carbon transfer cost and carbon holding cost on inventory control policy as well as the supply chain coordination problem. A two‐control limit inventory control policy is proved to be optimal and a contract with wholesale price, subsidy, and fixed setup cost is verified analytically to coordinate the supply chain. Finally, a numerical study is conducted to reveal managerial insights. We find that when the supply chain is coordinated, the chain's profit is more sensitive to carbon transfer cost while inventory level is more sensitive to carbon holding cost. Additionally, because of the complexity of the coordinated contract, when it is not easy to coordinate the supply chain, it is better to keep the values of wholesale price, subsidy, and fixed setup cost below the corresponding values for the coordinated supply chain.

Pricing, inventory and production policies in a supply chain of pharmacological products with rework process: a game theoretic approach

In this paper, an economic production quantity model in a three levels supply chain including multiple non-competing suppliers, single manufacturer and multiple non-competing retailers for multiple products with rework process under integrated and non-integrated structures is developed. In this chain, suppliers ship raw material to the manufacturer and the manufacturer combines the fixed percentage of different kinds of raw material to produce the finished products and then delivers them to the retailers. The Stackelberg game is established among the members of the chain. Optimizing the total profit of the chain under both structures applying the optimal pricing, inventory and production policies is the purpose of the research. Eventually, a numerical example is presented for comparing the total profit of the integrated and non-integrated chains of proposed model and some sensitivity analyses are performed to study the effects of parameter changes on the decision variables and the chain profit.

Contract design in a supply chain considering price and quality dependent demand with customer segmentation

We consider a two-level supply chain consisting of a manufacturer and a retailer. The retailer gives a final product to a competitive market with customer sensitive to price. The customer demand is assumed to be constant depending on the price and quality degree of the final product. The manufacturer decides on the quality degree of the product. The optimal values of the major decision variables of the chain are determined for different conditions. The supply chain in centralized condition is considered and the optimal values of the price and the quality degree are found. Chain profit in decentralized condition is optimized and the optimal values of wholesale price and quality degree are determined. Retailer׳s revenue sharing contract is designed and the optimal values of wholesale price and quality degree are found. Finally, a market segmentation condition in which customers are divided into two categories of quality oriented and price oriented is considered; then, the threshold of the percentage of potential quality oriented customers is determined. A set of numerical examples are designed in order to analyze the optimal values of the decision variables.

Robust supplier selection in a closed loop supply chain using a hybrid approach based on design of experiments and simulation

Supplier evaluation and selection is a vital problem in supply chain management of which the two most important factors are procurement cost and products quality level. Researchers have investigated many aspects of this problem so far. These factors, as delivery time and customer behaviour against product quality, are uncertain. Nevertheless, for the purpose of simple application, they are usually considered deterministic. To have more accurate modelling of the real world, it is necessary to consider these uncertain factors in models. Making sure that chain profit and product quality satisfy the decision maker, this paper develops a robust approach based on design of experiments and simulation for selection of suppliers in a closed loop supply chain, product quality. By implementing signal-to-noise ratio, variances of cost and product quality, as secondary objectives in optimisation process, are minimised to reduce the effect of noise factors on the objective functions under consideration.

Impacts of RFID technologies on supply chains: a simulation study of a three-level supply chain subject to shrinkage and delivery errors

This paper addresses the impact of introducing radio frequency identification (RFID) technologies in a three-level supply chain subject to inventory inaccuracy and delivery errors. Inventory inaccuracy occurs because of shrinkage errors (such as thefts, misplacements or unavailable items for sale, etc.), and delivery errors. We develop a simulation study to evaluate qualitative and quantitative impacts of RFID technologies on supply chain performances and profits. Different RFID systems are considered with different costs and efficiencies. Different tagging levels and different types of products are also examined. We analyse the impacts of RFID technologies when supply chains are reengineered using new possibilities enabled by RFID technologies. This paper provides also a general approach to help decision makers using simulation approaches in their decision processes.

An Approach to Solve a Possibilistic Linear Programming Problem

The objective of the paper is to deal with a kind of possibilistic linear programming (PLP) problem involving multiple objectives of conflicting nature. In particular, we have considered a multi objective linear programming (MOLP) problem whose objective is to simultaneously minimize cost and maximize profit in a supply chain where cost and profit coefficients, and related parameters such as available supply, forecast demand and budget are fuzzy with trapezoidal fuzzy numbers. An example is given to illustrate the strategy used to solve the aforesaid PLP problem.

Bargaining in a Push Supply Chain System under Partial Cross Ownership

Supply chain under partial cross ownership (PCO) refers to the dyad in which each one holds part of its partners shares. In a two-echelon push supply chain under the partial cross ownership, when the operational decisions are bargained, the supply chain is coordinated, and the allocation of the chain profit is dependent on the bargain coefficients and the reserve profits, and independent of the PCO structure: letting the retailer hold part of the suppliers shares doesnt affect the chain efficiency and both players profits. Similarly, letting the supplier hold part of the retailers shares doesnt affect the chain efficiency and both players profits.

Quantity Discount Supply Chain Models with Fashion Products and Uncertain Yields

This paper explores the quantity discount coordination models in the fashion supply chain with uncertain yields and random demand. The paper proves that, under the independent and noncoordinated decision patterns, there exists a Nash equilibrium between the supplier and the manufacturer which reduces the supply chain's profit margin. In order to achieve the “optimal” centralized supply chain expected profit margin, new quantity discount models have been established. Both the supplier-oriented and the manufacturer-oriented Stackelberg supply chain gaming models are investigated. Our analytical and numerical analyses show that the quantity discount contract proposed in this paper can largely reduce the negative influence brought by the uncertainty of yields and demand. Therefore, the profit margin of supply chains based on quantity discount can reach the optimal level of the supply chain under the centralized setting.

Centralized admission and production control in a two-stage supply chain with single component and customized products

Abstract This paper considers a two-stage supply chain that a make-to-stock facility produces a single component in anticipation of future demand and a make-to-order facility produces customized products using components with the option of to accept or reject each customer order. We address the problem of centralizing the admission and production control that maximizes the supply chain's profit subject to the system costs. Using a Markov decision process model, we characterize the structure of the optimal admission control and production policy and establish the monotonic impact of system parameters on the optimal policy. Two heuristics are presented and their performance is numerically compared to the optimal policy under different operating conditions of the system.

An uncooperative order model for items with trade credit, inventory-dependent demand and limited displayed-shelf space

This paper considers a two-echelon supply chain where a supplier sells a single product through a retailer, who faces an inventory-dependent demand. The supplier hopes to incentive the retailer to order more items by offering trade credit. The retailer places the ordered items on the display shelf (DS) with limited space and stocks the remaining items (if any) that exceed the shelf capacity in his/her backroom/warehouse (BW). From the supplier’s perspective, we focus mainly on under which conditions the supplier should offer trade credit and how he/she should design such trade credit policy and corresponding ordering policy to obtain much more benefits. From the retailer’s perspective, we discuss whether the retailer needs BW and exactly how many items need to be stocked in BW when the supplier offers trade credit. We formulate a “supplier-Stackelberg” game model, from which we obtain the conditions under which the presented simple trade credit policy not only increases the overall chain profit but also each member’s profit. We also show that the trade credit policy is always more beneficial to the retailer than to the supplier if it is offered.

A Supply Chain Collaboration Model Based on System Dynamics

This paper used the tool of system dynamics to build an evolutionary model of self-organization for the supply chain collaboration. By solving and the analysis of applications, we know that the two order parameters of supply chain collaboration and profitability determine the self-organized evolution of the system. If the supply chain collaboration has not reached the critical region, the deviation caused by random fluctuations will continue to decay until it disappears, and finally return to the original state. When the system parameters meet to the conditions of non-stability, random fluctuations will lead to the changes of the orderly structure of the system. The model reveals the evolutionary processes and nature of supply chain collaboration, and provides a basis for the development of the supply chain enterprises

Analytical model of adoption of item level RFID in a two-echelon supply chain with shelf-space and price-dependent demand

We investigate whether it is possible for the manufacturer as well as the retailer to derive economic benefits from item-level RFID. We consider two supply chain contracts. In the first instance the manufacturer sets the wholesale price for his product and in response the retailer sets the retail price and allocates the shelf-space. We find that in this setting item-level RFID is adopted in a decentralized supply chain at the same levels of RFID costs as in an integrated supply chain with a single decision maker. The second case that we consider involves a powerful retailer setting product shelf-space prices. In this setting the manufacturer essentially rents shelf-space from the retailer. We find that in this setting, the retailer may force the adoption of RFID even if it does not maximize the chain's total profit.

Chain Stores, Consumer Mobility, and Market Structure

Homogeneous products are often sold by chains and locals but the chains charge higher prices. We explain this pricing pattern as well as the empirical fact that chains became increasingly dominant at the same time as consumer mobility increased: Consumers bear setup costs whenever they visit a firm for the first time. A chain operating stores in all locations insures consumers against the need to bear setup costs repeatedly when moving to new locations. In equilibrium, the chain charges higher prices and attracts more consumers than locals. As consumer mobility increases, the chain's market share and profit increases.