Coordinating a Supply Chain When Manufacturer Makes Cost Reduction Investment in Supplier
We consider a supply chain consisting of an upstream supplier and a downstream manufacturer, in which the supplier provides a component to the manufacturer, facing a price-sensitive and uncertain demand. The manufacturer makes cost reduction investment in the supplier to improve the supplier’s produ...
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| Main Authors: | , , |
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| Format: | Article |
| Language: | English |
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Wiley
2016-01-01
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| Series: | Discrete Dynamics in Nature and Society |
| Online Access: | http://dx.doi.org/10.1155/2016/4762397 |
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| _version_ | 1849306452060012544 |
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| author | Shilei Huang Hong Fu Yongkai Ma |
| author_facet | Shilei Huang Hong Fu Yongkai Ma |
| author_sort | Shilei Huang |
| collection | DOAJ |
| description | We consider a supply chain consisting of an upstream supplier and a downstream manufacturer, in which the supplier provides a component to the manufacturer, facing a price-sensitive and uncertain demand. The manufacturer makes cost reduction investment in the supplier to improve the supplier’s production efficiency, which benefits the entire supply chain. We derive the optimal investment and operating decisions. Both the centralized and decentralized supply chains are studied. We show that the optimal investment and operating decisions in the decentralized setting may deviate from that in the centralized setting. To avoid the profit loss caused by such a deviation, we develop a coordination mechanism by introducing a combined policy of revenue-sharing policy and investment cost-sharing policy. We also show that the developed coordination mechanism can achieve Pareto improvement for the two players. |
| format | Article |
| id | doaj-art-2decff79f6b74d178f2ca3de6eecb687 |
| institution | Kabale University |
| issn | 1026-0226 1607-887X |
| language | English |
| publishDate | 2016-01-01 |
| publisher | Wiley |
| record_format | Article |
| series | Discrete Dynamics in Nature and Society |
| spelling | doaj-art-2decff79f6b74d178f2ca3de6eecb6872025-08-20T03:55:06ZengWileyDiscrete Dynamics in Nature and Society1026-02261607-887X2016-01-01201610.1155/2016/47623974762397Coordinating a Supply Chain When Manufacturer Makes Cost Reduction Investment in SupplierShilei Huang0Hong Fu1Yongkai Ma2School of Management and Economics, University of Electronic Science and Technology of China, Chengdu, Sichuan 611731, ChinaSchool of Management and Economics, University of Electronic Science and Technology of China, Chengdu, Sichuan 611731, ChinaSchool of Management and Economics, University of Electronic Science and Technology of China, Chengdu, Sichuan 611731, ChinaWe consider a supply chain consisting of an upstream supplier and a downstream manufacturer, in which the supplier provides a component to the manufacturer, facing a price-sensitive and uncertain demand. The manufacturer makes cost reduction investment in the supplier to improve the supplier’s production efficiency, which benefits the entire supply chain. We derive the optimal investment and operating decisions. Both the centralized and decentralized supply chains are studied. We show that the optimal investment and operating decisions in the decentralized setting may deviate from that in the centralized setting. To avoid the profit loss caused by such a deviation, we develop a coordination mechanism by introducing a combined policy of revenue-sharing policy and investment cost-sharing policy. We also show that the developed coordination mechanism can achieve Pareto improvement for the two players.http://dx.doi.org/10.1155/2016/4762397 |
| spellingShingle | Shilei Huang Hong Fu Yongkai Ma Coordinating a Supply Chain When Manufacturer Makes Cost Reduction Investment in Supplier Discrete Dynamics in Nature and Society |
| title | Coordinating a Supply Chain When Manufacturer Makes Cost Reduction Investment in Supplier |
| title_full | Coordinating a Supply Chain When Manufacturer Makes Cost Reduction Investment in Supplier |
| title_fullStr | Coordinating a Supply Chain When Manufacturer Makes Cost Reduction Investment in Supplier |
| title_full_unstemmed | Coordinating a Supply Chain When Manufacturer Makes Cost Reduction Investment in Supplier |
| title_short | Coordinating a Supply Chain When Manufacturer Makes Cost Reduction Investment in Supplier |
| title_sort | coordinating a supply chain when manufacturer makes cost reduction investment in supplier |
| url | http://dx.doi.org/10.1155/2016/4762397 |
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