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Simultaneous coordination of capacity building and price decisions in a decentralized supply chain.
- Source :
-
International Journal of Advanced Manufacturing Technology . Feb2013, Vol. 64 Issue 5-8, p961-976. 16p. 5 Charts, 6 Graphs. - Publication Year :
- 2013
-
Abstract
- In this paper, we investigate the simultaneous coordination of price and capacity building decisions in a dyadic supply chain. This problem is a combination of capacity reservation problem and pricing problem. While the coordination of supply chain with stochastic demand and fixed prices has received much attention in the literature, price-dependent and stochastic demand has been less considered. We study the latter case where a price-setting retailer faces a linear decreasing demand with respect to price. To capture the uncertainty of the demand, we add a stochastic variable to the demand function. In addition, we incorporate production rate and inventory cost on the supplier side. We propose Revenue Sharing Reservation Contract with Penalty (RSRP) as a coordination mechanism to align the price and capacity decisions. We then extend the model to include multiple retailers which are geographically dispersed. We next conduct a comprehensive numerical example with an extensive sensitivity analysis to understand the behavior and robustness of the supply chain under a RSRP, and finally, we draw some managerial implications. [ABSTRACT FROM AUTHOR]
Details
- Language :
- English
- ISSN :
- 02683768
- Volume :
- 64
- Issue :
- 5-8
- Database :
- Academic Search Index
- Journal :
- International Journal of Advanced Manufacturing Technology
- Publication Type :
- Academic Journal
- Accession number :
- 85134073
- Full Text :
- https://doi.org/10.1007/s00170-012-4046-y