Journal
TRANSPORTATION RESEARCH PART E-LOGISTICS AND TRANSPORTATION REVIEW
Volume 46, Issue 6, Pages 963-974Publisher
PERGAMON-ELSEVIER SCIENCE LTD
DOI: 10.1016/j.tre.2010.01.007
Keywords
Batch production; Double marginalization; Inventory; Integrated vendor-buyer model; Stock-dependent demand
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Funding
- Danish Social Science Research Council [275-07-0094]
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We develop an integrated vendor-buyer model for a two-stage supply chain. The vendor manufactures the product and delivers it in a number of equal-sized batches to the buyer. The items delivered are presented to the end customers in a display area. Demand is assumed to be positively dependent on the amount of items displayed. The objective is to maximize total supply chain profit. The numerical analysis shows that buyer-vendor coordination is more profitable in situations when demand is more stock dependent. It also shows that the effect of double marginalization provides a link between the non-coordinated and the coordinated case. (C) 2010 Elsevier Ltd. All rights reserved.
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