Manufacturer Purchases Research Articles

Optimal procurement decisions based on smoothing strategy for dual sourcing with different lead times

This study establishes a discrete-time inventory model with a smoothing procurement strategy in dual sourcing. Specifically, an assembly manufacturer purchases components from two suppliers: one overseas supplier with a long lead time but a low price, and one local supplier with a short lead time but a high price. A smoothing procurement approach taking into account previous ordering record and current demand is adopted by the assembly manufacturer. We start by exploring the scenario where storage space is not a constraint. The cost-minimization conditions for single sourcing and dual sourcing are studied. Assuming demand follows a normal distribution, the optimal order quantities and inventory levels are subsequently derived and shown to follow the same distribution. By comparing the inventory costs, it is found that dual sourcing is superior to single sourcing. Then, we examine the scenario where an assembly manufacturer with limited storage space collaborates with a third-party logistics company. The optimal order quantities, inventory levels, smoothing procurement coefficient and storage space are derived for the assembly manufacturer. Finally, numerical experiments with practical data are constructed to verify our findings.

Buying time for 3D printing

A US manufacturer's purchase of metal and carbon fiber additive manufacturing (AM) machines helped reduce production time, bureaucracy and cost.

Agricultural insurance and power structure in a capital-constrained supply chain

This study focuses on an agricultural supply chain with a capital-constrained manufacturer, a bank and an insurer under three power structures: insurer-led Stackelberg (IS), bank-led Stackelberg (BS) and vertical Nash (VN). By establishing a two-level Stackelberg game, we examine the application condition and role of agricultural insurance under three channel structures and reveal the preferences of the supply chain and its participants for different channel structures. This study shows that, in either model, the manufacturer purchases agricultural insurance when the bank is highly loss-averse, but the probability of the manufacturer adopting agricultural insurance in the BS model is lower than that of the VN model but higher than that of the IS model. In these three models, the manufacturer’s application of agricultural insurance increases the profits of the manufacturer, bank and insurer but reduces supply chain efficiency. In addition, from the perspective of the profit level and profit share of supply chain participants, for the manufacturer, the VN model of the two-level supply chain power structure betters than the BS and IS models of the three-level supply chain power structure, but the BS model is superior to the IS model; for the bank and the insurer, the higher their leadership positions in which power structure model, the better the power structure model. From the perspective of the overall profit and efficiency of the agricultural supply chain, the model preference of the supply chain is the same as that of the manufacturer. The findings provide new theoretical insights for the application of agricultural insurance and power relationship in the agricultural supply chain.

Analytical target cascading for multi-level supply chain decisions in cloud perspective

PurposeThe purpose of this paper is to adopt a three-stage cloud-based management system for optimizing greenhouse gases (GHG) emission and marketing decisions with supplier selection and product family design in a multi-level supply chain with multiple suppliers, one single manufacturer and multiple retailers.Design/methodology/approachThe manufacturer purchases optional components of a certain functionality from his alternative suppliers and customizes a set of platform products for retailers in different independent market segments. To tackle the studied problem, a hierarchical analytical target cascading (ATC) model is proposed, Jaya algorithm is applied and supplier selection and product family design are implemented in its encoding procedure.FindingsA case study is used to verify the effectiveness of the ATC model in solving the optimization problem and the corresponding algorithm. It has shown that the ATC model can not only obtain close optimization results as a central optimization method but also maintain the autonomous decision rights of different supply chain members.Originality/valueThis paper first develops a three-stage cloud-based management system to optimize GHG emission, marketing decisions, supplier selection and product family design in a multi-level supply chain. Then, the ATC model is proposed to obtain the close optimization results as central optimization method and also maintain the autonomous decision rights of different supply chain members.

Optimal production-inventory policy for the multi-period fixed proportions co-production system

Consider the multi-period production-inventory problem where a manufacturer purchases and processes a raw material into two products in fixed proportions when facing uncertain demands. In each period, the manufacturer first reviews the on-hand inventories of the products and then decides the purchase/processing quantity of the raw material. After processing the raw material into the end products, the demands of the two products are realized and satisfied by the available inventories. Any leftover inventories are carried to the next period while the unsatisfied demands are backordered. By proving the concavity and submodularity of the expected profit-to-go function, we establish that the one-dimensional produce-up-to policy is optimal. We also study the case where the raw material is seasonal and the manufacturer has only one chance to purchase. Modeling it as a dynamic program, we establish that the one-dimensional produce-down-to policy is optimal. Finally, we conduct numerical studies to examine the impacts of supply-demand balance and price fluctuation on the optimal policy, and derive managerial insights from the analytical findings.

Governmental cap regulation and manufacturer’s low carbon strategy in a supply chain with different power structures

Considering the cap-and-trade regulation and manufacturer’s two types of strategies: adopting green technology (GT) and purchasing carbon credits (PC), we develop game models to investigate the manufacturer’s production and emission abatement decisions as well as the governmental emission cap regulation in a supply chain with three power structures (Manufacturer Stackelberg (MS), Retail Stackelberg (RS) and Vertical Nash (VN)), and analyze how a manufacturer’s low carbon strategy changes with the various governmental cap under the three supply chain power structures. The main conclusions are as follows. If the manufacturer adopts green technology strategy, supply chain power structure will not affect social welfare. High consumer’s low-carbon preference is more beneficial to the social welfare, the government should advocate the consumer’s preference for low carbon product. If the manufacturer purchases carbon credits, the government under the power structure of VN will gain the most social welfare.

Trade Credit Policy Between Supplier–Manufacturer–Retailer for Ameliorating/Deteriorating Items

This paper is related to the advancement of the inventory models for ameliorating items and focused on the real-life business situation as with the time the deterioration rate of ameliorating items is increased. In the global world, every supply chain entities as suppliers/manufacturers/retailers want to increase the consumption of their goods without any losses. For this, he/she tries to lure manufacturer/retailers by offering some discounts, i.e. credit period for settling the account. The problem states that the manufacturer purchases the ameliorating items from the supplier, where the supplier offers his/her credit period to settle the account. The manufacturer purchases ameliorating items (like pigs, fishes, ducklings, etc.) and take those items as raw material; when the livestock matures the manufacturer sells it to the retailer and offer credit time for settling the account. Reason to propose the model is when the quantities of livestock become larger, then the manufacturer faces difficulty in maintaining all the livestock. In such a situation, the traditional method (without offering credit period) fails to provide the maximum profit to the manufacturer. Therefore, in order to get maximum profit, the manufacturer needs some more realistic scientific outlook for making decisions. The proposed model provides a more realistic assumption of business markets, by offering credit policy. In the introduced model, manufacturer faces amelioration and deterioration rate simultaneously due to the growth and the death of livestock. The amelioration and deterioration rates are assumed as the Weibull distribution type. Shortages allowed only for the retailer, which is partially backlogged. The main goal of this paper is to minimize the total relevant inventory cost for both the manufacturer and the retailers, by finding the optimal replenishment policy. The mathematical formulation with optimal solutions for manufacturer and retailers are given. Convexity and existence of the proposed model via numerical examples and graphical representations are explained. Finally, the conclusions with some future research direction are discussed.

Prisoner’s dilemma on behavioral choices in the presence of sticky prices: Farsightedness vs. myopia

When making decisions in a dynamic environment, myopic supply chain members tend to ignore the future effects of their decisions on the evolution of state dynamics. By contrast, far-sighted decision-makers consider about the impacts of current decisions on both current profits and future profits. In order to study how behavioral choices affect the operation decisions and profits of supply chain members, we develop a differential game with sticky prices, where one manufacturer purchases components from one supplier and makes final products for end customers. The supplier decides on its wholesale price while the manufacturer sets its production quantity. Either of supply chain members has two behavioral choices: myopia and farsightedness. We derive and compare equilibrium solutions under four different behavioral combinations. Our analysis shows that there always exists a prisoner’s dilemma caused by behavioral choices: farsightedness is a dominant strategy for either the supplier or the manufacturer, but both to act myopically makes both of them better off. Furthermore, comparing with other scenarios, the whole supply chain obtains the highest profit when both players are myopic. In addition, we introduce a revenue sharing contract with static wholesale price to mitigate the adverse impacts of the prisoner’s dilemma.

A Decentralized Production/Remanufacturing Inventory Model with Multiple Refurbished Components

This study aims to investigate the optimal inventory and pricing policies in a decentralized production/remanufacturing system with multiple refurbished components. A basic inventory problem with deterministic demand rate and return rate is considered. The manufacturer purchases recycled components from the collector, and sells remanufactured products as well as new products to customers. It is assumed that the customers tend to pay different prices for remanufactured products and new products. Both the manufacturer and the collector try to maximize their own profits. The equilibrium of the problem is formulated as a variational inequality. Numerical examples show that the manufacturer and the collector can change the retail prices and return-facilitating costs to influence the product demands and the quantity of returned end-of-use products, such that no surplus or shortage of any products and components will occur.

Study on Building Suppliers Network of Electrical Manufacturer with Uncertainty

In this paper, a suppliers-network combined partner-orientation suppliers and a priority–orientation supplier is provided for electrical manufacturer. As the uncertain factors in the market and social environment related with the supply chain are more and more, and researchers and companies focused their minds on the cost in the past. Then we analyze the internal and exterior factors influencing the proportion of amount that the manufacturer purchases from two kinds of suppliers. Finally, because the two kinds of suppliers have different characteristics and functions, we use non-zero-sum cooperative game approach to select partner-orientation suppliers. For the other kind of suppliers, based on supplier evaluation and selection index, we integrate AHP with extension approach to select them.

Establishing Nash equilibrium of the manufacturer–supplier game in supply chain management

We study a game model of multi-leader and one-follower in supply chain optimization where n suppliers compete to provide a single product for a manufacturer. We regard the selling price of each supplier as a pre-determined parameter and consider the case that suppliers compete on the basis of delivery frequency to the manufacturer. Each supplier's profit depends not only on its own delivery frequency, but also on other suppliers' frequencies through their impact on manufacturer's purchase allocation to the suppliers. We first solve the follower's (manufacturer's) purchase allocation problem by deducing an explicit formula of its solution. We then formulate the n leaders' (suppliers') game as a generalized Nash game with shared constraints, which is theoretically difficult, but in our case could be solved numerically by converting to a regular variational inequality problem. For the special case that the selling prices of all suppliers are identical, we provide a sufficient and necessary condition for the existence and uniqueness of the Nash equilibrium. An explicit formula of the Nash equilibrium is obtained and its local uniqueness property is proved.

Pandemic influenza vaccination: Lessons learned from Latin America and the Caribbean

In April 2009, the World Health Organization (WHO) reported the emergence of a new influenza (H1N1) virus which led to the first pandemic declaration of the 21st century. Most countries in Latin America and the Caribbean (LAC) had a national preparedness plan in place at this time; however, the vaccination component of such plans was largely undeveloped. Nevertheless, countries were able to capitalize on the infrastructure of their immunization programs and widespread experience utilizing the seasonal influenza vaccine to prepare rapidly, developing H1N1 vaccination plans targeting individuals with chronic disease, pregnant women and health care workers, among others. In LAC vaccine was acquired through three mechanisms: the Pan American Health Organization's Revolving Fund, direct manufacturer purchase, and WHO donations. Vaccine access was not equitable both in quantity of vaccine available and timeless of vaccine availability. As of December 2010, an estimated 145 million doses had been administered in LAC. Despite high regional coverage, there were large variations in coverage at the national level; pregnant women had the lowest coverage, despite their high risk for morbidity and mortality. The number of severe adverse events reported in LAC was similar to those expected with the seasonal influenza vaccine. Risk communication was one of the key challenges countries faced, mainly due to concerns and misinformation spread regarding vaccine safety. Countries and the international community need to learn from the experiences gained during H1N1 vaccination in order to be better prepared for the next pandemic.

Technical note: Reexamination of all‐or‐none inspection policies in a supply chain with endogenous product quality

AbstractThis note studies the optimal inspection policies in a supply chain in which a manufacturer purchases components from a supplier but has no direct control of component quality. The manufacturer uses an inspection policy and a damage cost sharing contract to encourage the supplier to improve the component quality. We find that all‐or‐none inspection policies are optimal for the manufacturer if the supplier's share of the damage cost is larger than a threshold; otherwise, the manufacturer should inspect a fraction of a batch. © 2008 Wiley Periodicals, Inc. Naval Research Logistics, 2008

Cooperative Versus Individual Approaches to Treatment of Contaminated Groundwater by Rural Residents in the Northeast

Point-of-use/point-of-entry treatment can provide an affordable means for rural residents on private wells to remedy groundwater contamination. Cooperation among homeowners was hypothesized to be a means of further reducing treatment costs due to quantity discounts and avoidance of dealer mark-ups. Data obtained through a mail survey of water treatment firms was used to test this hypothesis. Individual and group purchase, installation and maintenance costs and manufacturer and dealer costs were compared using analysis of variance. Results indicate a cooperative treatment approach may provide benefits due to quantity discounts but little potential exists for savings via direct manufacturer purchase.