Single-vendor multi-buyer supply chain coordination models

Abstract

Cost reduction is one of the core means for business participants to pursue better profitability. From an individual perspective, the only concern is any possible reduction in their own cost. This is included in the standard economic ordering quantity (EOQ) model and economic batch quantity (EBQ) model. However, if the total system cost can be reduced to a lower level than the combined individual costs, each supply chain member can be potentially more beneficial. Motivated by the coordination policy, the synchronized cycles model in Chan & Kingsman (2007) as the base model, several extensions of the synchronized cycles model from different directions are considered in this study. Firstly, stochastic demand is considered instead of the conventional deterministic demand that represents more realistic and uncertain situations. An algorithm especially developed for the stochastic synchronized cycles model is proposed. With the outstanding performance of the synchronized cycles model with deterministic demand, this study discovers whether the performance of the model under stochastic situations is also favourable. In addition, vehicle routing is integrated into the stochastic model to address the detailed routing problems associated with the shipment cost. In the next step, the routing problem is solved subject to a green objective, i.e., advantages of minimizing carbon emissions instead of costs are also investigated. Besides the carbon footprint minimization, reverse logistics, another green topic, is incorporated into the deterministic synchronized cycles coordination model. This study aims to examine the effect of reverse logistics on the total system cost, where the vendor, and at the same time also the recycler, is assumed to be responsible for producing new products, delivering products (forward logistics), collecting used products and recycling or remanufacturing them into effectively new products depending on demands (reverse logistics). Inventory of new and effectively new products and collected used products is formulated, and effects of buyers' rate of returning the used products on the performance of the inventory policies are analyzed. Lastly, vendor-managed inventory, considered as an alternative of incentives for buyers, is studied with the deterministic synchronized cycles policy so as to re-distribute the savings between the vendor and buyers and obtain further cost reductions.