Buyer–supplier relationship and optimisation model in a dynamic collaborative network with shortages allowed. Issue 7 (3rd July 2017)

• Record Type: Journal Article
• Authors: Chen, Liang-Tu
• Is Part Of: International journal of computer integrated manufacturing. Volume 30:Issue 7(2017)
• Page Start: 755
• Page End: 767
• Publication Date: 2017-07-03
• Subjects: supply chain management -- pricing theory -- collaborative networks -- shortages; Computer integrated manufacturing systems -- Periodicals; 670.427
• DOI: 10.1080/0951192X.2015.1067919
• Languages: English
• ISSNs: 0951-192X

Abstract

Abstract : To remain competitive, enterprises must build and manage product/service customisation and dynamic collaborative networks to respond to market needs in a flexible manner with competitive price and high product/service quality. This study deals with the emerging research problem of optimally dynamic combined decisions: retail price, stock depletion time/service level (SL) and replenishment schedule/quantity in a decentralised two-echelon perishable product collaborative network comprising a single supplier and a single retailer (buyer) over a finite multi-period planning horizon. Analytical solutions are derived using calculus with dynamic programming under two different trading policies, namely retailer-managed inventory with price-only (RMIPO) mode and vendor-managed inventory with consignment contract (VMICC) mode. In both models, shortages are allowed and are fully backlogged. The validity of the proposed approach is demonstrated using the case of a simple supply chain comprising a regional seafood supplier and a local branch store of a national retail chain. The results show that the VMICC policy yields lower retail price, larger replenishment quantity, higher SL and greater channel-wide profit than the RMIPO policy and achieves a win-win situation for both parties in the supply chain. Additionally, consumers benefit from lower retail price and higher SL in the VMICC policy.