Vendor Buyer Research Articles

Efficient Formulation for Vendor–Buyer System Considering Optimal Allocation Fraction of Green Production

The classical joint economic lot-sizing (JELS) policy in a single-vendor single-buyer system generates an equal production quantity in all cycles, where the input parameters remain static indefinitely. In this paper, a new two-echelon supply chain inventory model is developed involving a hybrid production system. The proposed model simultaneously focuses on green and regular production methods with an optimal allocation fraction of green and regular productions. Unlike the classical mathematical formulation, cycles do not depend on each other, and consequently, each model parameter can be adjusted to be responsive to the dynamic nature of demand rate and/or price fluctuation. A rigorous heuristic approach is used to derive a global optimal solution for a joint hybrid production system. This paper accounts for carbon emissions from production and storage activities related to green and regular produced items along with transportation activity under a multi-level emission-taxing scheme. The results emphasize the significant impact of green production on emissions. That is, the higher the allocation fraction of green production, the lower the total amount of emissions generated by the system, i.e., the system becomes more sustainable. Adopting a hybrid production method not only decreases the greenhouse gas (GHG) emissions dramatically, but also reduces the minimum total cost per unit time when compared with regular production. One of the main findings is that the total system cost generated by the base closed-form formula of the proposed model is considerably lower in the first cycle (subsequent cycles) than that of the existing literature, i.e., 33.59% (16.13%) when the regular production method is assumed. Moreover, the optimal production rate generated by the proposed model is the one that minimizes the emissions production function. In addition, the system earns further revenue by utilizing a mixed transportation policy that combines the Truck Load (TL) and Less than Truck Load (LTL) services. Illustrative examples and special cases that reflect different realistic situations are compared to outline managerial insights.

Determining the Optimal Replenishment Policy in an Integrated Vendor–Buyer with Multiple Delivery Policy

Determining the Optimal Replenishment Policy in an Integrated Vendor–Buyer with Multiple Delivery Policy

An Optimal Integrated Inventory Approach for Vendor–Buyer with Substitutable Deteriorating Product Under Joint Replenishment and Carbon Emission

An Optimal Integrated Inventory Approach for Vendor–Buyer with Substitutable Deteriorating Product Under Joint Replenishment and Carbon Emission

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.

Low carbon inventory model for vendor‒buyer system with hybrid production and adjustable production rate under stochastic demand

In this study, a mathematical inventory model for a supply chain system made up of a vendor and a buyer under stochastic demand is formulated. The vendor serves as a manufacturer who produces items, while the buyer serves as a retailer who buys the items from the vendor and sells them to end customers. In addition to utilizing regular production as a production base, the vendor also uses green production. Green production adopts green technology, which comprises environmentally friendly inventions that are used to reduce emissions. Green production is more costly than regular production, but it generates lower emissions. The production rate is adjustable, which enables decision makers to control the emissions and production cost. The objective of this study is to find the optimal production allocation, ordering quantity, shipment frequency, safety factor, and production rate such that the joint total cost is minimized. An algorithm is suggested to solve the mathematical problems and its application is validated with a numerical example. The results show that the changes in the emissions, carbon tax, and production cost parameters exhibit significant effects in determining the optimal production allocation. Furthermore, by controlling the production rate flexibly, the supply chain can lessen the emissions released during production and maintain the total cost. Finally, a sensitivity analysis is carried out to explain the usage of the proposed model.

An optimal integrated inventory management for vendor buyer with substitutable deteriorating product under joint replenishment and cost of substitution

An optimal integrated inventory management for vendor buyer with substitutable deteriorating product under joint replenishment and cost of substitution

Network embeddedness in illegal online markets: endogenous sources of prices and profit in anonymous criminal drug trade

AbstractAlthough economic sociology emphasizes the role of social networks for shaping economic action, little research has examined how network governance structures affect prices in the unregulated and high-risk social context of online criminal trade. We consider how overembeddedness—a state of excessive interconnectedness among market actors—arises from endogenous trade relations to shape prices in illegal online markets with aggregate consequences for short-term gross illegal revenue. Drawing on transaction-level data on 16 847 illegal drug transactions over 14 months of trade in a ‘darknet’ drug market, we assess how repeated exchanges and closure in buyer–vendor trade networks nonlinearly influence prices and short-term gross revenue from illegal drug trade. Using a series of panel models, we find that increases in closure and repeated exchange raise prices until a threshold is reached upon which prices and gross monthly revenue begin to decline as networks become overembedded. Findings provide insight into the network determinants of prices and gross monthly revenue in illegal online drug trade and illustrate how network structure shapes prices in criminal markets, even in anonymous trade environments.

Optimizing a supply chain problem with nonlinear penalty costs for early and late delivery under generalized lead time distribution

This article presents a tangible vendor–buyer cooperative strategy that benefits both, the vendor and the buyer where the demand is deterministic constant, and the delivery lead time follows a general distribution. To build a realistic coordination mechanism, a delivery tolerance time range is specified beyond which two different types of nonlinear penalty costs termed as an early delivery penalty cost and late delivery penalty cost are assessed. Shortages are allowed for a short time-span. The penalty costs are taken as a product of a linear function of delivery lead time and a nonlinear function of the delivery lot size. The problem is formulated as a multi-variable mixed-integer nonlinear programming (MINLP) problem and the objective of this research is to achieve the minimum integrated expected cost where decision variables are: reorder point, delivery lot size, number of deliveries, and delivery time thresholds. Since closed-form solutions are not immediately obtained, different search procedures are employed to resolve issues relating to an integer solution. Numerical results are provided for uniform, exponential and normal distributions of delivery lead time to establish the general model.

Advance payment based vendor–buyer production inventory model with stochastic lead time and continuous review policy

In this paper, a multi-cycle vendor–buyer supply chain production inventory model is conceptualized. Products in the system are considered to be deteriorated at a constant rate. Before replenishment of the order quantity, the buyer paid the purchase price in advance to the vendor in multiple time with an interest. In the lead time of buyer, the market demand is stochastic. Vendor’s production cost of the item depends on the production rate, labor and technology used for the production. During the production period and shipment of quantity, a green-house gas $$(CO_2)$$ is emitted at a constant rate to the environment. Finally, numerical examples and sensitivity analysis are provided to illustrate the presented model and also corresponding discussions and conclusion are presented.

Price discrimination in informal labor markets in Bogot\xe1: an audit experiment during the 2018 FIFA World Cup

We conducted an audit experiment to examine whether street vendors in Bogotá (Colombia) exert price discrimination based on buyers’ attributes, such as gender and nationality, and based on product characteristics, such as the increasing marginal valuation of items needed to complete a collection. We exploited the seasonal demand for album stickers related to the FIFA World Cup Russia 2018. In our within-subjects design, experimenters carried out in-person audits and quoted a pre-determined list of missing stickers. They interacted with 59 sticker vendors located in five geographic clusters and collected 287 vendor–buyer interactions. We find that prices quoted to foreign buyers are higher than prices quoted to Colombian buyers. By contrast, we do neither find evidence supporting direct gender-based discrimination, nor that vendors charge a higher price per sticker when the list of missing stickers is shorter. We complement the study with a qualitative analysis based on interviews that reveal vendors’ pricing strategies, their awareness of price discrimination, and the trade of counterfeits. The qualitative results suggest that price discrimination appears to be unconscious.

Inventory and sales decisions in a vendor–buyer system with imperfect items and learning in inspection

ABSTRACT In this study, we propose a joint economic lot-sizing model to include learning process along with errors in inspection and full backordering system. We aim to study pricing and inventory decisions in a two-level supply chain involving a single vendor and a single buyer in which the demand is sensitive to price and company’s advertisement efforts. The mathematical inventory model is developed analytically and solved using a proposed algorithm. The objective of the model is to maximise joint total profit by simultaneously determining optimal shipment size, number of deliveries, backorder quantity and product selling price. A numerical example is provided to show the application of the model and to investigate the impact of key parameter’s changes on model behaviour. By comparing the integrated/centralised model to the independent/decentralised model, we note that the integrated/centralised model provides better profit to the system, along with lower selling price and smaller amount of backorder.

An integrated vendor–buyer supply chain model for backorder price discount and price-dependent demand using service level constraints and carbon emission cost

This paper derives a single-vendor single-buyer supply chain model with setup cost reduction, controllable lead time and backorder price discounts using service level constraints. The customer's demand is assumed to be selling-price dependent and the lead time demand follows a normal distribution. This integrated model is used to optimise the total number of shipments, order quantity, safety factor, setup cost and backorder price discount. An algorithm is developed to obtain the numerical results and to demonstrate the applications and performance of the proposed methodology.

Impact of relational communication on buyer–supplier relationship satisfaction: role of trust and commitment

PurposeThe present study aims to examine the impact of relational communication, operationalized in terms of information sharing, quality and frequency of information, on buyer's trust and relationship satisfaction in a buyer–vendor relationship. The study also tests the mediating role of trust and the moderating role of relationship commitment in relational communication and satisfaction relationship.Design/methodology/approachThe data for the study were collected through a questionnaire survey from 321 managers of the different firms who were directly or indirectly involved in making procurement or purchasing decision in the firm and were familiar with the firm's supplier relationships.FindingsRelational communication was found to be positively related to relational satisfaction and trust partially mediated this relationship. Further, relationship commitment moderated relational communication-satisfaction relationship, such that the positive affect of relational communication on relational satisfaction was accentuated when buyer experienced higher relationship commitment towards the supplier.Research limitations/implicationsUsing single source, self-reported questionnaire data and cross-sectional research design are the limitations of this study. Studies in future should consider a dyadic perspective. The study outlines the need to explore investments and strategies in enhancing relational communication in buyer–vendor relationships.Originality/valueAnchored in theoretical foundations of social exchange theory, the study integrates and tests behavioral aspects of buyer–vendor relationship. Testing an integrated model with direct and indirect effects of relational communication on relationship satisfaction in buyer–vendor is a significant contribution of the research. The study also contributes by examining relational exchanges in buyer-vendor relationships in India, an underrepresented context in buyer–supplier relationship (BSR) literature.

A novel approach to safety stock management in an integrated supply chain with controllable lead time and ordering cost reduction using present value

This paper presents a novel approach to safety stock management and investigates the impact of lead time reduction within an integrated vendor–buyer supply chain framework using present value where lead time and ordering cost reductions act dependently. In particular, the cost of the safety stock is determined by adopting a logistic approximation to the standard normal cumulative distribution. The service level is formulated in relation to the dimension of the single shipment, to the average demand of the buyer and to the number of admissible stockouts. We first discuss the case where the lead time and ordering cost reductions with linear function, and then consider the logarithmic functional relationship. Numerical examples including the sensitivity analysis with some managerial insights of system parameters is provided to validate the results of the supply chain models. The main contribution of this paper is introducing various types of ordering cost reduction in Bragliaet al.(Appl. Stoc. Mod. Bus. Ind.32(2016) 99–112) by handling a new approach.

The critical points of production rate under vendor–buyer coordination: explicit solutions

AbstractThis paper revisits the deterministic joint vendor–buyer production‐inventory problem and assumes that the production rate can be controlled. To guard against unwarranted extreme solutions, such as too abrupt production or, on the other hand, everlasting production aligned with demand, we place lower and upper bounds on the production rate. In addition, we incorporate an independent upper bound on the overall cycle of producing and remaining idle. Through identifying several critical points of the production rate, we solve the resulting problem for the optimal triplet (P, Q, n), where P is the constant production rate, a key decision variable, Q is the entire lot size produced in a cycle, and n is the number of equal successive shipments of this lot to the buyer. Our own treatment is purely analytical, which adds value from a theoretical perspective. Worst values of the production rate, when the other decision values are optimal for P, are found. We prove that only two production rates, the lowest and the highest, can yield minimal joint costs, and we identify which of the two is optimal under given relative positions of the defined critical points. Numerical illustration indicates that the joint cost sharply increases for small values of the bound on the overall cycle length. This study highlights the importance of solving variants of the suggested model and of developing managerial alternatives that relax this constraint as much as possible.

A vendor–buyer inventory model with lot-size and production rate dependent lead time under time value of money

The paper studies an integrated vendor–buyer model with shortages under stochastic lead time which is assumed to be variable but depends on the buyer’s order size and the vendor’s production rate. The replenishment lead time and the market demand uncertainty are assumed to be reduced by changing the regular production rate of the vendor at the risk of paying additional cost. Shortages are partially backlogged and the backlogging rate depends on the length of the buyer’s replenishment lead time. The proposed model is formulated to obtain the net present value (NPV) of the expected total cost of the integrated system through optimization of (i) the buyer’s order quantity, (2) the buyer’s safety factor, and (3) the vendor’s production rate. Theoretical results are derived to demonstrate the existence and uniqueness of the optimal solution. Through extensive numerical study, some valuable managerial insights are obtained.

A neoteric approach to geometric shipment policy in an integrated supply chain with setup cost reduction and freight cost using service level constraint

This paper explores a neoteric approach to geometric shipment policy and concerns the impact of controllable lead time, setup cost reduction, lost sales caused by stock-out and freight cost within an integrated vendor–buyer supply chain configuration using service-level constraint. In particular, the transportation cost is a function of shipping weight, distance and transportation modes. In other words, truckload (TL) and less-than-truckload (LTL) shipments. A heuristic model is developed to minimize the joint expected total cost (JETC), when the mode of transportation is limited to TL and LTL shipments. Numerical examples including the sensitivity analysis with some managerial insights of system parameters is implemented to endorse the outcome of the supply chain models.

Integrated vendor–buyer strategies for imperfect production systems with maintenance and warranty policy

Collaboration has evolved as a key component of many modern supply chains, supporting the competitive advantages of companies in a range of operations from manufacturing to sales. With this viewpoint, the present paper develops an integrated inventory model in which manufacturing is carried out at the vendor’s end so as to fulfill demand at the buyer’s doorway. As the production process is presumed to be imperfect it shifts from an “in-control” state to “out-of-control” state at any random time and yields non-conforming items. The vendor uses regular preventive maintenance actions for the efficient operation of the production system and offers free minimal repair warranty on the products sold to the buyer. Along with preventive maintenance actions the vendor also uses the rework process and restoration process as effective steps towards minimizing the imperfections of the production system. The proposed model solves the non-linear cost minimization problem through a generalized reduced gradient method by using Lingo 15.0. The aim is to jointly optimize the order size, backorder size and the number of shipments in order to minimize the integrated cost of the vendor and the buyer. Numerical analysis and sensitivity analysis is performed on key parameters that render some important supervisory insights.

The effect of human errors on an integrated stochastic supply chain model with setup cost reduction and backorder price discount

This study develops an integrated vendor–buyer inventory model for a supply chain where quality issues and human error affect its coordination. Each lot shipped to the buyer contains defective items, with a rate which randomly changes from a lot to the other. The buyer inspects every shipped lot to segregate defective items. However, the inspection process at the buyer’s end goes wrong in the classification of defective and non-defective items. On the other hand, the buyer may run out of inventory, but in order to avoid lost sales, he/she offers a price discount on the backlogged items to his/her customers. Due to the vendor-buyer relationship, the buyer invests in reducing the setup cost of the vendor. Supply chain’s lead-time is considered variable, and two models are developed based on the probability distribution of the lead-time demand. In the first model, it is assumed that lead-time demand follows a normal distribution, while in the latter one, it does not follow any certain distribution. Two models are developed to determine the joint optimal decision variables that minimize the total cost of the supply chain. Two iterative algorithms are developed to obtain the optimal solution for both models. A set of numerical analysis and sensitivity analysis are conducted to gain insights.

Integrated Vendor–Buyer Lot-Sizing Model with Transportation and Quality Improvement Consideration under Just-in-Time Problem

This paper deals with the problem of transportation and quality within a Just-in-Time (JIT) inventory replenishment system. Formerly, transportation and quality problem are often modelled separately in most integrated inventory lot-sizing models. Hence, this paper develops an integrated vendor-buyer lot-sizing model by considering transportation and quality improvements into a JIT environment. The model is developed for minimising a total vendor–buyer system cost by optimising decisions such as delivery quantity, production batch, number of shipments, and process quality. Numerical examples and sensitivity analysis are provided to illustrate the proposed model. The developed model was also compared with an enumeration method to analyse the effectiveness of the proposed model to find the optimum solution. The results emphasise that the proposed model contributes to a new approach and obtains a near optimum solution for inventory replenishment decisions. The results are also beneficial to JIT practices as the model can improve the transport payload and reduce the chance of defective products and improving quality-related costs.