Comparing different coordination scenarios in a three-level supply chain system

The consignment stock (CS) policy, independently or coupled with vendor managed inventory (VMI), has been practised by businesses and shown to be profitable. It helps to reduce or eliminate out-of-stock instances caused by fluctuations in demand. CS brings several benefits to collaborating parties....

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Bibliographic Details
Published inInternational journal of production research Vol. 55; no. 14; pp. 4068 - 4088
Main Authors Zahran, Siraj K., Jaber, Mohamad Y., Zanoni, Simone
Format Journal Article
LanguageEnglish
Published London Taylor & Francis 18.07.2017
Taylor & Francis LLC
Subjects
consignment stock
Coordination
coordination mechanism
Inventory management
Parameter sensitivity
payment scheme
Sensitivity analysis
supply chain management
Supply chains
three-level supply chain
traditional policy
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Summary:The consignment stock (CS) policy, independently or coupled with vendor managed inventory (VMI), has been practised by businesses and shown to be profitable. It helps to reduce or eliminate out-of-stock instances caused by fluctuations in demand. CS brings several benefits to collaborating parties. Unlike the two-level supply chain models in the literature, this paper considers a three-level supply chain that consists of a supplier, a vendor and a buyer with CS policy agreements. The paper also examines four coordination scenarios (a combination of traditional and CS) in conjunction with a payment scheme between adjacent parties. Nine coordination cases (models) are provided. A sensitivity analysis is performed to study the effects of some parameters on the performance of the developed models. Most of the results showed that a combination of traditional and CS policies returned a higher total system profit.
ISSN:0020-7543
1366-588X
DOI:10.1080/00207543.2016.1249431