Two-echelon Supply Chain Model Research Articles

Remanufacturing Operations in Different Financial Ownership Structures with Consideration of the Upwards Supplier

Under the increasing environmental pressure, remanufacturing has increasingly become a new mode of recycling economy and upgrading and transforming the equipment manufacturing industry. Some enterprises include remanufacturing businesses in the original production system by holding or controlling shares in other remanufacturing enterprises. This paper builds a two-echelon supply chain model composed of a supplier, a manufacturer, and a remanufacturer, considering the different ownership structures (i.e., shareholding and share-controlling) between them, in which the supplier sells non-remanufacturable parts to the manufacturer and the remanufacturer. At the same time, the optimal decisions of each firm are considered. The results show that for the manufacturer, a higher shareholding ratio means that it can obtain more profits. For the supplier, the impact of the shareholding ratio depends on the manufacturing cost. When the manufacturing cost is relatively low, the stock sharing relationship between the manufacturer and the remanufacturer will decrease the supplier’s profit. When the manufacturing cost is relatively high, it will depend on the shareholding ratio. In the case of shareholding between the manufacturer and the remanufacturer, a higher shareholding ratio will decrease the supplier’s profit. From the perspective of the supply chain, when the production cost is high enough, the supply chain’s profit decreases first and then increases with the shareholding ratio. Furthermore, the increase in the manufacturer’s shareholding in remanufacturing does not always improve the remanufacturing proportion of products.

A Stochastically Optimized Two-Echelon Supply Chain Model: An Entropy Approach for Operational Risk Assessment.

Minimizing a company's operational risk by optimizing the performance of the manufacturing and distribution supply chain is a complex task that involves multiple elements, each with their own supply line constraints. Traditional approaches to optimization often assume determinism as the underlying principle. However, this paper, adopting an entropy approach, emphasizes the significance of subjective and objective uncertainty in achieving optimized decisions by incorporating stochastic fluctuations into the supply chain structure. Stochasticity, representing randomness, quantifies the level of uncertainty or risk involved. In this study, we focus on a processing production plant as a model for a chain of operations and supply chain actions. We consider the stochastically varying production and transportation costs from the site to the plant, as well as from the plant to the customer base. Through stochastic optimization, we demonstrate that the plant producer can benefit from improved financial outcomes by setting higher sale prices while simultaneously lowering optimized production costs. This can be accomplished by selectively choosing producers whose production cost probability density function follows a Pareto distribution. Notably, a lower Pareto exponent yields better supply chain cost optimization predictions. Alternatively, a Gaussian stochastic fluctuation may be proposed as a more suitable choice when trading off optimization and simplicity. Although this may result in slightly less optimal performance, it offers advantages in terms of ease of implementation and computational efficiency.

The optimal factoring type with partial credit guarantee in the textile industry: disclosed or undisclosed

Small and medium-sized textile enterprises generally experience financial difficulties, with a high default risk because of the textile industry’s characteristics of low concentration, long industrial chains, and large seasonal fluctuations. Using a two-echelon supply chain model of the textile industry comprising a core retailer and capital-constrained supplier, this study investigates disclosed and undisclosed factoring while considering the default risk of both the supplier and retailer under two guarantee mechanisms: no guarantee and a third-party partial credit guarantee. Utilizing a Stackelberg game model, this study finds that both the default risk and financial institutions’ loan-to-value ratio for accounts receivable significantly affect optimal financing decisions and financing efficiency. First, excessively pursuing higher loan-to-value ratios lowers financing efficiency. In addition, a partial credit guarantee from a third party can effectively reduce the financing interest rate but cannot improve financing efficiency if the supplier assumes the guarantee fee. Thus, while introducing a guarantee mechanism to control financing risk, financial institutions should consider supply chain participants, rather than the supplier, to assume the guarantee fees. Furthermore, both the supplier and retailer should finance through disclosed factoring regardless of a guarantee. Our findings offer textile industry-specific financing insights regarding the options of guarantee and factoring financing type based on the accounts receivable.

A game theory framework for newly launched greening product in two-echelon supply chain

A two-echelon supply chain model is considered where one manufacturer and one retailer reduce the customers' sensitivity to the product price and stimulate the demand of the product by introducing facilities such as the product's greenness, service level and promotional effort. They share the costs jointly on the above facilities following some agreements. The models are formulated as profit maximisation problems for the whole system and the individual chain members. The game theoretical approach is used to solve the models under centralised and decentralised decision scenarios. Several particular models are studied by considering one or two facilities (greenness, service level and promotional effort) at a time. Finally, numerical experiments are conducted and some managerial decisions are presented from the optimal results and sensitivity analyses. It is demonstrated that the greenness, service level and promotional effort activities stimulate higher demand and fetch more profits for the supply chain and its members.

Determination of optimal price and quantity in a two-echelon supply chain model with promotional effort and feedback effect in stochastic scenario

The present paper analyzes a dual channel two-echelon supply chain model consisting of one manufacturer and one retailer for a single product. The retailer uses traditional retail channel whereas the manufacturer uses e-tail channel as well as retail channel to boost the sales of the product. Customer feedback is an important factor in present global business environment because from the customer feedback, the manufacturer can reveal the level of satisfaction of the customers and this can help the to improve the product quality. Good feedback from the customers also attracts other new customers to buy the products. A company can never know whether customers are getting value out of their product without customer feedback. The effects of getting customer feedback from the customers and the promotional effort by advertising or by sales team’s initiatives are taken into account in the present model. The model is solved analytically to determine the decision variables which maximize the total profit in case of decentralized as well as centralized systems and the results have been illustrated by numerical examples. The study of this paper reveals that the profit margins of the individual channel members increase considerably if the feedback of the customers on the product is considered.

The Effects of Cognitive and Skill Learning on the Joint Vendor–Buyer Model with Imperfect Quality and Fuzzy Random Demand

This study investigates the optimization of an integrated production–inventory system that consists of an original equipment manufacturer (OEM) supplier and an OEM brand company. The cognitive and skill learning effect, imperfect quality, and fuzzy random demand are incorporated into the integrated two-echelon supply chain model to minimize the total cost. We contribute to dividing the learning effect into cognitive learning and skill learning, we build a new learning curve to resemble the real complexity more closely and avoid the problem that production time tends towards zero after production is stable. In total, five production–inventory models are constructed. Furthermore, a solution procedure is designed to solve the model to obtain the optimal order quantities, and the optimal shipment size. Additionally, the symbolic distance method is used to deal with the inverse fuzzification. Then numerical analysis shows that the increase of the cognitive learning coefficient and skill learning coefficient will reduce the total cost of the production–inventory system. With the increase of the cognitive learning coefficient, the gap between the total cost of cognitive learning and skill learning, and that of Wright learning, correspondingly decreases consistently. However, with the increase of the skill learning coefficient, there is a consistent corresponding increase. The total cost of cognitive learning and skill learning shows hyperbolic characteristics. The important insights of this study for managers are that employees’ knowledge plays an important role in reducing costs in the early learning stage and humanistic management measures should be taken to reduce employees’ turnover. Compared with the skill learning training for production technicians, we should pay more attention to the training of cognitive learning.

A two-echelon supply chain model with deterioration and stock-dependent demand via forward and backward stocking policies

A two-echelon supply chain model with deterioration and stock-dependent demand via forward and backward stocking policies

A two-echelon supply chain model with deterioration and stock-dependent demand via forward and backward stocking policies

A two-echelon supply chain model with deterioration and stock-dependent demand via forward and backward stocking policies

Research on the Risk Aversion Strategy of Manufacturers Share Holding Energy Service Company

Considering the constraints of carbon trading policy, manufacturers have strengthened joint emission reduction with energy service company (ESCO). In view of the capital constraint of ESCO and the demand risk of the manufacturer, in order to promote better cooperation between the manufacturer and ESCO, the influence of manufacturer's risk aversion on supply chain performance is studied. In this paper, we use the mean-variance (MV) model to construct the two-echelon supply chain models of manufacturer's non-shareholding ESCO, manufacturer's shareholding ESCO and manufacturer's shareholding ESCO under risk aversion, respectively. This paper studies the risk aversion strategy of manufacturer's shareholding ESCO, discusses the influence of relevant parameters on decision variables, and analyses the influence of different shareholding proportion and risk aversion coefficient on profit through numerical analysis. The results show that the emission reduction of ESCO and the selling price of the manufacturer are increased when the manufacturer chooses the appropriate shareholding proportion, and interestingly, the manufacturer's shareholding in ESCO will also increase its emission reduction price. However, in order to avoid the risk of equity investment, manufacturers adopt the strategy of reducing the price of emission reduction and sales price, but this behavior will not only reduce their own profits, but also make the emission reduction lower.

The anti-collusion dilemma: Information sharing of the supply chain under buyback contracts

While previous studies did not consider that buyback contracts in collusive research of supply chains and the buyback contract particularly strengthens collusion between retailers in the supply chain, we address a new research question: What is the effect of different retailer collusive patterns and information sharing mechanisms on the benefits of each member in supply chains with buyback contracts? To answer this research question, we develop four two-echelon supply chain models. The model consists of one supplier and two competing retailers. We consider the two dimensions of collusion mode and information sharing type and derive the optimal equilibrium solutions for each member. The theoretical analysis demonstrates the following results: (i) With explicit collusion, retailers are less willing to vertically share information with the supplier. (ii) Tacit collusion with low demand uncertainty motivates information sharing because the wholesale price can correctly convey the supplier’s information to retailers. (iii) Increasing the probability of high demand or reducing the buyback rate can benefit all members in the supply chain. (iv) Different from the wholesale price and revenue sharing contract, in the buyback contract, the whole supply chain sustains losses from vertical information sharing under the condition of collusion with high demand uncertainty. A numerical experiment shows interesting insights: Although explicit collusion generally brings profit improvement to retailers, they prefer to choose tacit collusion to effectively identify price signals when the demand uncertainty is lower. We check the robustness of results and find that the main results will not be changed in the extended model where the buyback price is lower than the wholesale price.

Suppliers’ trade credit strategies with transparent credit ratings: Null, exclusive, and nonchalant provision

Due to poor ability to resist risks, penniless retailers face high bankruptcy risk, which may spread to suppliers who provide trade credit for them and then affect suppliers’ trade credit provision decision. A supplier who transacts with downstream retailers with heterogeneous credit ratings has three trade credit provision strategies: null (the supplier does not provide trade credit), exclusive (the supplier provides trade credit for only a part of retailers), and nonchalant trade credit provision (the supplier provides trade credit for all retailers). In this study, we establish a two-echelon supply chain model comprising one supplier and two capital-constrained retailers to investigate the supplier’s and retailers’ preferences for different trade credit provision patterns. By analyzing and comparing the three trade credit provision strategies, we find that the supplier is always beneficial from providing nonchalant trade credit. However, nonchalant trade credit provision is only attractive for the excluded retailer when his creditworthiness is poor and for the privileged retailer, nonchalant trade credit provision is never a preferable option, which leads to a counterintuitive situation that the three parties can never reach an agreement on trade credit provision pattern. Our results indicate that credit rating information serves as a risk warner for the supplier, allowing the supplier to evaluate the retailers’ repayment ability accurately and set interest rates accordingly, but this is unfavorable to the retailers. For policy-makers, they should start with reducing the risk of default in trade credit to promote the development of trade credit.

Optimal ordering policy in a two-echelon supply chain model with variable backorder and demand uncertainty

The paper investigates a two-echelon production-delivery supply chain model for products with stochastic demand and backorder-lost sales mixture under trade-credit financing. The manufacturer delivers the retailer’s order quantity in a number of equal-sized shipments. The replenishment lead-time is such that it can be crashed to a minimum duration at an additional cost that can be treated as an investment. Shortages in the retailer’s inventory are allowed to occur and are partially backlogged with a backlogging rate dependent on customer’s waiting time. Moreover, the manufacturer offers the retailer a credit period which is less than the reorder interval. The model is formulated to find the optimal solutions for order quantity, safety factor, lead time, and the number of shipments from the manufacturer to the retailer in light of both distribution-free and known distribution functions. Two solution algorithms are provided to obtain the optimal decisions for the integrated system. The effects of controllable lead time, backorder rate and trade-credit financing on optimal decisions are illustrated through numerical examples.

Inventory control techniques in a two-echelon supply chain model with fuzzy demand and learning effect

Inventory control techniques in a two-echelon supply chain model with fuzzy demand and learning effect

Inventory control techniques in a two-echelon supply chain model with fuzzy demand and learning effect

Inventory control techniques in a two-echelon supply chain model with fuzzy demand and learning effect

Determination of optimal price and quantity in a socially responsible two-echelon two-channel supply chain model

Determination of optimal price and quantity in a socially responsible two-echelon two-channel supply chain model

Coordination and competition in two-echelon supply chain using grey revenue-sharing contracts

PurposeThis study examines the potential of contracts as one of the supply chain coordination mechanisms under competitive conditions. It also investigates a two-echelon supply chain model with two manufacturers and two retailers to develop a competitive structure in grey stochastic demand.Design/methodology/approachSupply chain demand is considered as a stochastic phenomenon depending on the selling price of the product. Also, products can be replaced by market manufacturers. Each retailer faces the pricing of products from two manufacturers, leading to competition between downstream retailers. In the present study, the duopoly supply chain model was presented based on the wholesale price contract, revenue-sharing contract and quantity discount contract separately.FindingsGrey optimization and analysis of their coordination were presented. The results showed the high performance of revenue-sharing contracts in the supply chain. Thus, manufacturers will give the next priority to quantity discount contracts.Originality/valueOrdering is the main factor contributing to competitive decision-making. Meanwhile, decision-making along with ordering and pricing will be required due to the nature of the demand.

The Effect of O2O Retail Service Quality in Supply Chain Management

The present study focuses on a single-vendor, single-buyer supply chain model for a single type of product with upgraded service provided to the buyer by the vendor. Vendors often increase their profit by providing a lower quality of a particular product. In this study, an advanced supply chain model is developed to increase service in the presence of an unreliable vendor and an online-to-offline (O2O) channeling system. The vendor provides lower quality items to the customer, even though they had committed to providing a certain quality product, in order to increase their profit. For more realistic results, demand is considered to be price-, quality-, and service-dependent. To advertise and sell the products, the manufacturer uses an online system, which the buyer also uses to choose and order the product, where the particular product is delivered to the customer by a third (offline) party; that is, the concept of an O2O retail channel is adopted to improve the service level of the supply chain management (SCM). To control the out-of-control state and improve the production quality, investment is used. Contrary to the literature, service is considered to be constrained, which makes the model more realistic. A classical optimization technique is used to solve the model analytically and a two-echelon supply chain model is obtained under the advanced O2O retail channel, along with optimized profit, shipment volume, selling price, ordering cost, service, back-ordered price discount, lead time, and safety factor values. Some numerical examples and a sensitivity analysis of the key parameters are provided, along with graphical representation, in order to validate the model.

Two-Echelon Supply Chain Model with Demand Dependent On Price, Promotional Effort and Service Level in Crisp and Fuzzy Environments

This article explores a supply chain model consisting of a single manufacturer and two competing retailers. The manufacturer, as a Stackelberg leader specifies a wholesale price and bears servicing costs of the products. Then, both the retailers advertise the products and sell them to the customers. So, the demand of the products is influenced by selling price, service level and also promotional effort. On the basis of this gaming structure, two mathematical models have been formed - crisp model, where each member of the chain exactly knows all the cost parameters and fuzzy model where those cost parameters are considered as fuzzy numbers. Optimal strategies for the manufacturer and the retailers are determined and some numerical examples have been given. Finally, how perturbations of parameters affect the profits of the chain members have been determined.

A two-echelon supply chain model with price and warranty dependent demand and pro-rata warranty policy under cost sharing contract

In this article, a two-echelon supply chain model with a single-vendor a single-buyer is considered. The vendor's production process is imperfect and the market demand is assumed to be dependent on the buyer's selling price and warranty period. The vendor consents to return a definite portion of the buyer's purchase value, if any product is found defective within the length of warranty. The refund value or the warranty cost is considered as a function of the warranty period and the buyer's selling price of the item. This warranty cost is assumed to be fully borne by the vendor in the first model (Model I) while in the second model (Model II), it is assumed that the buyer agrees to bear a portion of the warranty cost. The proposed models are solved under decentralized scenario. We also derive and optimize the average total profit of the supply chain in order to obtain the optimal decisions of the centralized model. We consider a Stackelberg game between the vendor and the buyer in the decentralized scenario, where the vendor is assumed to be the leader and the buyer as the pursuer. Through numerical study, it is observed that, with respect to all the key decisions of the models, Model II provides better outcomes than Model I. Sensitivity analysis is also carried out to examine the impacts of changes of parameter-values on the optimum decisions.

Pricing Strategy and Channel Co-ordination in a Two-Echelon Supply Chain Under Stochastic Demand

The proper coordination among the members of the supply chain is one of the greatest challenges among the supply chain managers and researchers. It is also experienced by the supply chain managers that, only the effective coordination among each entity of the chain can lead to more profit of members of the chain. In the proposed model, we have developed a two-echelon supply chain model considering one manufacturer and one retailer. The demand for items has been assumed to be stochastic since, in most of the cases, it is unpredictable. A part of the demand function has been assumed to be dependent on the unit selling price of the retailer which is sensitive to the recommended retail price of the manufacturer and another part is dependent on a random variable of market potential. According to the characteristics of the product, the manufacturer sometime offers buyback policy to the retailer but not always. For this reason, we investigate each case of the model where two decentralized decisions and one centralized decision are employed to explore the optimal behaviours in the corresponding circumstance. In the situation of demand uncertainty, the most profitable pricing strategy for the members of the supply chain is derived from this model. The numerical examples and the sensitivity of the key parameters show that the prevalent power of the decentralized decisions increases the selling price of the product and decrease the total profit of the supply chain. Also, the results ensure the fact that the joint decision taken by the manufacturer and the retailer leads to the maximum profit for the supply chain.