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Supply chain coordination in vendor-managed inventory systems with stockout-cost sharing under limited storage capacity
- Source :
- European Journal of Operational Research. 248:95-106
- Publication Year :
- 2016
- Publisher :
- Elsevier BV, 2016.
-
Abstract
- We examine vendor-managed inventory (VMI) systems with stockout-cost sharing between a supplier and a customer using an EOQ model with shortages allowed under limited storage capacity, in which a stockout penalty is charged to the supplier when stockouts occur at the customer. In the VMI systems the customer and the supplier minimize their own costs in designing a VMI contract and making replenishment decisions, respectively. We compare the VMI systems with an integrated supplier–customer system where the supply chain total cost is minimized. We show that VMI with stockout-cost sharing and the integrated supplier–customer system result in the same replenishment decisions and system performance if and only if the supplier's reservation cost is equal to the minimum supply chain total cost of the integrated system. On the other hand, we also show how VMI along with fixed transfer payments as well as stockout-cost sharing can lead to the supply chain coordination regardless of the supplier's reservation cost. We also provide several interesting computational results.
- Subjects :
- 021103 operations research
Information Systems and Management
Supply chain management
General Computer Science
Operations research
Total cost
Supply chain
Stockout
05 social sciences
0211 other engineering and technologies
Reservation
02 engineering and technology
Management Science and Operations Research
Industrial and Manufacturing Engineering
Modeling and Simulation
0502 economics and business
Vendor-managed inventory
Cost sharing
Operations management
Business
Economic order quantity
050203 business & management
Subjects
Details
- ISSN :
- 03772217
- Volume :
- 248
- Database :
- OpenAIRE
- Journal :
- European Journal of Operational Research
- Accession number :
- edsair.doi...........66f12d240e83eb31e89fc644ba301cb8