EVALUATING THE IMPACT OF MISPLACEMENT ERRORS ON DECENTRALIZED RETAIL SUPPLY CHAIN

This paper studies a supply chain in which a manufacturer sells a single product to a retailer who faces a Newsvendor problem subject to inventory inaccuracies. Due to execution problems, all products received from the manufacturer are not available on shelf for sales either because they are lost in...

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Bibliographic Details
Published inIFAC Proceedings Volumes Vol. 39; no. 3; pp. 247 - 252
Main Authors Rekik, Yacine, Jemai, Zied, Sahin, Evren, Dallery, Yves
Format Journal Article
LanguageEnglish
Published 2006
Subjects
decentralized retail supply chain
inventory inaccuracy
misplacement errors
Newsvendor model
Newsvendor model
inventory inaccuracy
misplacement errors
decentralized retail supply chain
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Summary:This paper studies a supply chain in which a manufacturer sells a single product to a retailer who faces a Newsvendor problem subject to inventory inaccuracies. Due to execution problems, all products received from the manufacturer are not available on shelf for sales either because they are lost in the backroom or misplaced in the store. We consider three scenarii: in the Centralized Scenario, we consider a single decision-maker who is concerned with maximizing the entire chain's profit. In the Decentralized Uncoordinated Scenario, the retailer and manufacturer act as different parties and do not cooperate. The third scenario is the Decentralized Coordinated Scenario where we give conditions for coordinating the channel under a buyback contract. We analyze the impact of misplacement errors, in terms of additional underage and overage costs, on the store performance and we investigate the effect of coordination as a lever to increase manufacturer and retailer's profits.
ISSN:1474-6670
DOI:10.3182/20060517-3-FR-2903.00138