Common Replenishment Epochs Research Articles

Collaboration Strategy for a Decentralized Supply Chain Using Linear Physical Programming

In recent years, the environment surrounding companies has become more challenging. It has become more difficult for many companies in the manufacturing industry to possess all the skills they need, such as production, warehousing, and retailing, so they need to outsource certain skills. In supply chains with several companies, each has an optimal strategy. Specifically, supply chains where the solution is decided through negotiations with their partners are defined as “decentralized supply chains.” In such situations, collaborative relationships are important. One possible approach is replenishment contracts between vendors and buyers under the condition that demand for each buyer is constant. In a buyer-dominated supply chain, because the vendor cannot choose solutions that lower the satisfaction of buyers, it is difficult to change the replenishment intervals. The common replenishment epochs (CRE) strategy is one of the methods used to address this issue. The vendor integrates the buyers’ replenishment timings using CRE and provides a price discount on the products to compensate for the increase in the cost to the buyers. The price discount rate is calculated based on the worst reduction rate in the costs incurred by the buyers based on the economic order quantity (EOQ) model. The optimal CRE and discount rate are decided such that the cost incurred by vendor is minimized. The increased emphasis on the worst reduction rates can potentially lead to biases in buyer satisfaction, and the price discount rate is overestimated. Then, the cost of the vendor increases. Hence, through the negotiations with less satisfied buyers, the vendor changes the CRE so that their satisfaction is improved and the price discount is lower. As a result, the vendor can reduce its cost. This study develops a model to find an improved solution after the negotiations. If satisfaction of multiple players is regarded as multi-objective, a solution of multi-player decision-making is obtained using multi-objective optimization. Linear physical programming (LPP) has been applied as a form of multi-objective optimization, and it is possible to determine the weight coefficients using the preference ranges of the objective functions. In addition, by considering the buyers’ preference levels, the constraints of the discount rates are relaxed and the vendor’s cost can be reduced. Therefore, this study develops a model based on the CRE strategy using LPP.

An integrated approach of Fuzzy AHP and fuzzy TOPSIS in modelling Contractual design of supply chain inventory coordination mechanism.

In recent decades, firms are facing the challenges of lack of inventory coordination issues in multi echelon inventory coordination environment. Contractual design of supply chain inventory coordination mechanism (SCICM) are necessary for effective and efficient SCM and not merely better profit distribution within supply chain trading partners (SCTPs), but effective coordination mechanism is key necessity for complex supply flow network. SC structure consists of SV and MB, SC for a multi products flow network considered. SCTPs can be coordinated by better contractual design for perfect SCICM. These criteria are namely controllable lead time and asymmetric information; common replenishment epoch; inventory-level-dependent demand rate; VMI system with stock-out cost sharing; sales rebate contract and VMI. FAHP and FTOPSIS approaches can be used to integrate more consistent evaluation and prioritisation of SCTPs based on five SCICM criterion determined by factor analysis of survey data and expert opinion of retail industry. FAHP is used to calculate relative weight of each SCICM criteria and SCP is ranked based on closeness coefficient. Calculated for each partners are using FTOPSIS.

An integrated approach of fuzzy AHP and fuzzy TOPSIS in modelling contractual design of supply chain inventory coordination mechanism

In recent decades, firms are facing the challenges of lack of inventory coordination issues in multi echelon inventory coordination environment. Contractual design of supply chain inventory coordination mechanism (SCICM) are necessary for effective and efficient SCM and not merely better profit distribution within supply chain trading partners (SCTPs), but effective coordination mechanism is key necessity for complex supply flow network. SC structure consists of SV and MB, SC for a multi products flow network considered. SCTPs can be coordinated by better contractual design for perfect SCICM. These criteria are namely controllable lead time and asymmetric information; common replenishment epoch; inventory-level-dependent demand rate; VMI system with stock-out cost sharing; sales rebate contract and VMI. FAHP and FTOPSIS approaches can be used to integrate more consistent evaluation and prioritisation of SCTPs based on five SCICM criterion determined by factor analysis of survey data and expert opinion of retail industry. FAHP is used to calculate relative weight of each SCICM criteria and SCP is ranked based on closeness coefficient. Calculated for each partners are using FTOPSIS.

Coordination of inventory: A case study of city logistics

The managerial organizations are betting to have best results by means utilization collaborative processes and coordinated with her strategic partners. Researchers that study logistics are concentrating the design of new methodologies, methods, techniques and tools that they allow managing adequately the policies for demand driven supply network. The objective of this paper is to propose a methodology that managed as a project the coordination of inventory for multiproduct with multiple companies for the optimization the costs joint logistics in an operating context of urban distribution of goods demand driven. The decisional vision of this methodology is based in the model of periodic review of economic order interval for multiple items extended to a system just in time that in general, consists of determining a common replenishment epoch for the efficient charging unit homogenizing its stock keeping unit in two containers base ten for the model of physical distribution between a supplier and multiple buyers. Finally, was tested in a company leader in the manufacture of parts for vehicles of Bogota D.C achieving improve joint logistics costs of storage up to 0.85 points absolute in comparison with his own model of accounting cost the service of the storage, allowing him to estimate the unitary benefits of the service provided the inventory management in 1,7 USD/m2-month by warehouse position and the 2 USD/m2-month by container.

Coordinating supplier-retailer using multiple common replenishment epochs with retailers’ choices

Purpose: Provide a coordination strategy using multiple common replenishment epochs (MCRE) for a single-supplier multi-retailer supply chain. Design/methodology/approach: The demand of a product occurs only with a group of heterogeneous and independent retailers with constant rates, whereas all their order requests are fulfilled by the supplier. The supplier decides a set of MCREs with general price and extra bonus to entice the retailers to join any one of the MCREs, or to let them remain with their original order time epochs. A retailer is willing to participate in a CRE as long as the retailer’s cost increase is within its tolerance. This paper provide a mixed integer programming to determine the MCRE strategies in order to minimize the total costs of the supplier. Findings: The results illustrate that MCRE model provided in the paper can generate a better replenishment coordination scheme than single CRE models. Practical implications: Replenishment coordination is one of the most important mechanisms to improve the efficiency in supply chains, e.g., chain convenience stores in the modern retail industry. Originality/value: This is a follow-up research on Joint Economic Lot Size (JELS) models with a focus on multiple retailers with their replenishment coordination.

Headquarter-centered common sourcing management through order coordination and consolidation

It is common for subsidiaries of a group company to use the same types of components for producing similar products. Different subsidiary companies may well procure such components from the same suppliers. This paper studies two sourcing management models. One is the Subsidiary-Autonomous Sourcing Management (SD-ASM) where subsidiaries manage their inventories and place purchasing orders independent of each other. The other is the Headquarter-centered Common Sourcing Management (HQ-CSM) where purchasing orders of subsidiaries are processed centrally through some kind of headquarter coordination. In the SD-ASM model, each subsidiary places replenishment orders at a time interval corresponding to their economic order quantity (EOQ). In the HQ-CSM model, two purchasing order management policies are examined. One is the Order Coordination policy in which common replenishment epochs or time periods are proposed by the headquarter and the subsidiaries are encouraged to coordinate the timing of their orders based on the common replenishment epochs. The other is the Order Consolidation policy in which the subsidiaries combine the quantity of their orders and the headquarter places a combined order with the supplier. In the Order Coordination policy, classic RAND heuristic is used to find the best common replenishment epoch and the best replenishment timing of each subsidiary. In the Order Consolidation policy, the optimal order quantity of the combined order is obtained from a mathematical model. The combined order is then allocated to the subsidiaries according to a proportional allocation rule. A series of numerical studies is conducted to compare the costs of the SD-ASM and HQ-CSM policies. The results show that HQ-CSM outperforms SD-ASM in terms of cost and robustness against demand uncertainties. This achievement is largely due to the economies of process (synergistic ordering process), the economies of scale (large order quantity with price discount) and risk pooling effect (transshipments). The results also reveal that the Order Consolidation policy with a combined order always performs better than the Order Coordination policy with common replenishment epochs especially in face of high demand uncertainties and high service level in the global market.

Privacy Preserving Coordinated Inventory Replenishment Policies in a Multi-Stage Supply Chain

Most of the CRE solutions either assume existence of a central planner who has all the information about the system, or assume that each participant of the computation shares all of his information with other participants. These solutions, however, are problematic when the data is sensitive and the participants are reluctant to share their private, proprietary information. The development and deployment of privacy preserving coordinating model in supply chain based on common replenishment epoch could allow supply chain collaborations to take place without revealing any participant's data to the others, reaping the benefits of collaboration while avoiding the drawbacks. In this paper, secure multi-party computation protocols are applied in the problem of a multi-stage supply chain, where the objective is to find a CRE policy for each facility in the system such that the total average ordering and inventory-related cost of the entire system is minimized.

Privacy Preserving Coordinating Model in Lot to Lot Supply Chain Based on Common Replenishment Epoch

One of the important streams of research in supply chain management is the coordination between suppliers and retailers by varying the lot-size and the purchase price and common replenishment epoch (CRE). But most of the CRE solutions either assume existence of a central planner who has all the information about the system, or assume that each participant of the computation shares all of his information with other participants. These solutions are problematic when the data is sensitive and the participants are reluctant to share their private information. The development and deployment of privacy preserving coordinating model in lot to lot supply chain based on common replenishment epoch could allow supply chain collaborations to take place without revealing any participant's data to the others, reaping the benefits of collaboration while avoiding the drawbacks. In this paper, we develop and apply secure minimum sum of multi-dimensional protocol to the problem of coordinating a single-vendor multi-retailer inventory system with a probabilistic demand which follows normal distribution, where the objective is to find a CRE policy for each facility in the system such that the total average ordering and inventory-related cost of the entire system is minimized.

MODELING THE EFFECT OF ORDER TIMING REDUCTION ON COORDINATING SUPPLY CHAIN INVENTORIES USING A SELECTIVE DISCOUNT STRATEGY

Prior studies show that coordinating supply chain inventories with common replenishment epochs (CRE) provides benefit for vendor and buyers. Coordination using selective discount (SD) strategy allows some buyers to participate in the coordination scheme while other buyers continue to order as earlier. This can reduce the vendor's total cost more than that of all buyers participating and no buyer coordination in many circumstances. This paper considers the situation in which SD buyers place orders before CRE due to demand timing uncertainty. According to vendor flexibility, each SD buyer with early ordering incurs various levels of penalty cost to compensate for possible capacity loss for the vendor. The proposed models also allow for a more practical situation by considering the cases of equal and unequal probabilities of early ordering for SD buyers. The results indicate that the vendor's cost savings can be improved substantially based on the vendor flexibility, probability of early ordering, and the number of SD buyers involved in early ordering.

Pricing and order coordination of two-echelon supply chain under duopolistic retailer's competition

This paper examines the pricing and order coordination decisions in a two-echelon supply chain with one manufacturer who supplies a single product to duopolistic retailers, whose demands interact with the assumption of being price-sensitive. The problem is analysed under the Stackelberg structure, in which the manufacturer acting as a leader declares her wholesale price and a Common-Replenishment-Epochs (CRE) schedule to competitive retailers, and the duopolistic retailers acting as followers respond with their sales prices and associated order policies. By theoretical analysis and numerical example, we find that CRE strategy not only induce lower retail price and higher total demand, but also change the market sharing among duopolistic retailers. The effects of change of several parameters on the optimal decisions are also analysed.

A NEW COOPERATIVE SCENARIO FOR SUPPLY CHAINS USING COMMON REPLENISHMENT EPOCHS

In this paper, we propose a new cooperative scenario for supply chains using common replenishment epochs based on the mathematical model presented in Viswanathan and Piplani’s [25] paper. In order to solve an optimal solution for the cooperative scenario, we first conduct a theoretical analysis on the optimal cost function of the mathematical model. Then, we propose an efficient search algorithm by utilizing our theoretical results on the cooperative scenario. Also, we introduce a saving-sharing mechanism that could motivate the buyers to cooperate with the vendor. Importantly, the proposed saving-sharing mechanism assists the supply chain system to create a multi-win situation among the vendor and the buyers. Using the 48 sets of data in Viswanathan and Piplani’s [25] paper, we demonstrate that the proposed cooperative scenario could attain significant improvement on the costs for both the vendor and the buyers in comparison to the Stackelberg-game scenario.

Impact of demand uncertainty on coordinating supply chain inventories through common replenishment epochs

Prior studies have shown that inventories in a one vendor, multi-buyer supply chain with deterministic demands can be coordinated effectively through the use of common replenishment epochs (CRE). In this paper, we study the impact of demand uncertainty on the effectiveness of coordinating such a supply chain. We develop a model to analyse the coordination mechanism using CRE in a one-vendor, multi-buyer supply chain, when the demand faced by the buyers is stochastic. Our numerical study based on the model found that coordination through CRE may not always be beneficial when the demand variance is high. We also investigate a strategy of advance order processing by the vendor to improve the effectiveness of coordination through CRE.

Selective discount for supplier–buyer coordination using common replenishment epochs

A supplier may reduce its order costs by providing an incentive in the form of price discounts to buyers to restrict their replenishment intervals to multiples of a common replenishment epoch (CRE). This coordination mechanism was studied by Viswanathan and Piplani who suggested that the supplier offer a discount that is the maximum of the discount required by all buyers. We generalize their model to allow for a selective discount policy that, if beneficial, excludes some buyers to minimize the supplier’s total cost. Using a computational study, we observe that offering discounts to buyers selectively, if necessary, by segmenting them and offering multiple CRE, reduces the supplier’s cost in many scenarios.

ANALYSIS ON COORDINATING SUPPLY CHAIN INVENTORY THROUGH COMMON REPLENISHMENT EPOCHS

ABSTRACT In this paper, we analyze a supply chain model presented in Viswanathan and Piplani's (V&P) paper. In V & P's model, one vendor distributes a product to multiple buyers. The vendor offers a price-discount to entice the buyers to accept a pre-specified common replenishment epoch (CRE). In order to attract the buyers to follow the CRE strategy, the vendor's price-discount not only needs to compensate the buyers' cost increase in inventory, but also, to allure the buyers with extra purchase savings. Viswanathan and Piplani proposed a heuristic to solve this supply chain model, though we illustrate that some logic errors exist in their heuristic. In this study, we explore the optimality structure of V & P's model using a small-step search procedure. Interestingly, we discover that its optimal-cost curve is piece-wise linear with respect to price-discount. Our theoretical properties give good facilities for devising a search algorithm to secure a global optimal solution for V & P's model. Using a variety of numerical experiments, we confirm that the proposed search approach outperforms V & P's heuristic.

Coordinating supply chain inventories through common replenishment epochs

This paper proposes a model to study and analyze the benefit of coordinating supply chain inventories through the use of common replenishment epochs or time periods. A one-vendor, multi-buyer supply chain for a single product is analyzed. Under the proposed strategy, the vendor specifies common replenishment periods and requires all buyers to replenish only at those time periods. The vendor offers a price discount to entice the buyers to accept this strategy. The optimal replenishment period and the price discount to be offered by the vendor are determined as a solution to a Stackelberg game. After developing a method to solve the game, a numerical study is conducted to evaluate the benefit of the proposed coordinated strategy.