Optimization And Coordination Of Supply Chain Under (r, Q) Policies

Supply chain optimization focuses on optimizing expected profits of a particular firmin a supply chain through integrating the operational decisions of the firm. Supply chaincoordination focuses on optimizing the overall performance through coordinating the ac-tivities of all the firms so that each firm's objective is aligned with the system's objective.To achieve optimization and coordination of a supply chain, the tasks of managing logis-tics, information and money transfer are all important issues. In this paper, the problemof optimization and coordination of a supply chain is studied based on a basic inventorymodel with continuous review (r, Q) policy. Diferent modes of supply chain manage-ment are investigated, including "retailer managed inventory" and "vendor managed in-ventory". Based on three basic supply chain models, diferent supply chain contracts areused to coordinate the supply chain. Moreover, the optimization of decisions of pricingand inventory management are also considered in these models.Based on continuous review (r, Q) policy, a system comprising a single vendor and asingle retailer is considered. A vendor-managed-inventory program is used to coordinatethe system. Two business scenarios that are popular in vendor-managed-inventory pro-gram are "vendor with ownership" and "retailer with ownership". We design two types ofcontract for these two scenarios respectively, and investigate the system performance withthe contracts through numerical studies.For a supply chain with retailer's pricing decision, we study how to optimize thepricing and inventory management decisions, as well as how to coordinate the actions ofdiferent firms on the chain. A normal revenue-sharing contract and a policy-dependentvendor-managed-inventory contract are designed.For a supply chain with multiple competing retailers and involves decisions of pricingand inventory management, we give an efcient approach to characterize the relationshipbetween pricing decisions and inventory management decisions. Based on the approach,solution methods for centralized decisions and Nash equilibria in Cournot competitionwith simultaneous decisions of pricing and inventory management are developed, as wellas the existence and conditions of uniqueness of the equilibrium. Besides, optimal sequen-tial decisions of pricing and inventory management are studied. Numerical computations are provided to evaluate the efciency of the solution methods and system performancesin diferent scenarios.