Research On Lateral Cooperation Based On Sharing And Transshipment

Under the increasingly intensified competition in modern markets, more and more enterprises recognize the benefits of cooperation among them. It is the trend that enterprises quest for win-win through vertical and horizontal cooperation. The paper analyzes lateral cooperation among members in supply chain management. Firstly, the paper theoretically analyzes the impact of lateral cooperation on members'capacity investment decisions, production decisions and their profits. Then the paper considers lateral cooperation in assemble-to-order (ATO) system, analyzes the performance in this system, studies manufacturers'optimal inventory decisions, and examines the optimal production and procurement decisions for ATO manufacturers with limited capacities.Chapter 2 analyzes lateral cooperation between two manufacturers in two supply chains, using multi-dimension newsvendor model. Demand in one supply chain is relatively stable and its distribution is determined. Demand distribution in the other supply chain changes with time. The paper discusses the impact of capacity sharing and information sharing on manufacturers'capacity investment decisions and their profits. The following results are derived. Firstly, the manufacturers'optimal capacities and profits become larger under cooperation compared with no cooperation. Secondly, if manufacturers can only share their capacities, they will get extra profits from investing larger capacities. So manufacturers will always accept capacity sharing. Lastly, if manufacturers can also share their information, then the changes of their optimal capacities and profits are uncertain. So whether or not manufacturers will share their information depends on the characters of customers'demands.In chapter 3 the paper considers lateral cooperation among manufacturers whose demands are uncertain and short-run manufacturing capacities are limited, using the method of stochastic comparison. Before customers'demands arrive, manufacturers may produce some products. After customers'demands arrive, manufacturers with insufficient capacities can cooperate with manufacturers who have excess products and capacities. Some useful results have been found. If customers'demands follow normal distribution, then under conditions when product price is smaller than some critical value (or larger than another critical value, or demands correlation decreases, or more manufacturers participate in cooperation) cooperation will make order quantities move closer to region around mean demand. Cooperation is profitable for both manufacturers and customers. Each manufacturer's expected profit increases as correlation among customers'demands decreases, and as more manufacturers participate in cooperation. As manufacturers'short-run manufacturing capacities become larger, they will produce less in advance and their total profits become larger, so larger short-run capacities are more profitable.Chapter 4 is concerned with the performance of a two-echelon ATO system with lateral cooperation, using queuing theory. Consider a two-echelon ATO system with one depot and many distributors. Transshipments are allowed among distributors. Based on Markov analysis, recursive algorithms are derived to compute probabilities under stable states when the system can use complete-pooling transshipment, none complete-pooling transshipment and delayed lateral transshipment. Two methods are presented to compute the average number of customer orders that can not be completely filled. Numerical experiments show that these methods are very accurate. The average number of order-based backorders can be reduced and customer satisfaction can be increased as transshipments are introduced into the system. The risk-pooling ability increases as more distributors participate in cooperation. The relationship between demands correlation and order-based backorders depends on demands characteristics. Which transshipment method is preferred depends on the parameters of this system.Chapter 5 analyzes the manufacturers'optimal inventory decisions in an ATO system with lateral cooperation, using discrete optimization method. Firstly, expressions of average items'inventory on hand, expected order-based backorders, average number of items been transshipped among manufacturers are derived. Then a steepest-decent algorithm is developed to search for the manufacturers'optimal inventory decisions, when the system uses both complete-pooling lateral transshipment method and delayed lateral transshipment method. The goal is to minimize the average total cost. Numerical experiments show that cooperation can reduce cost, and the more manufacturers involved, the more cost been reduced. With the increase of item lead-times, the manufacturers'base stock levels and their costs increase. But if all lead-times increase twice, the base stock levels and the costs increase less than twice. As the correlation among customers'demands decreases, the average cost decreases, but the change of base stock levels is not monotonous.Chapter 6 presents a profit-maximization model for ATO manufacturers with limited capacities, and a genetic algorithm is developed to solve this model to find the optimal procurement and production decision. Because of the long lead-times of items, manufacturers may procure items and assemble products in two stages, namely before and after receiving the confirmation of customer orders. By analyzing assemble priority of different products, the optimal procurement and production decision in the second stage is derived. Based on this result, a profit-maximization model is presented. Using genetic algorithm this model can be solved and the optimal procurement and production decision in the first stage can be find. Numerical experiments are offered to find the impact of cooperation on manufacturers'decisions.This paper has the following innovative results. Firstly, the paper analyzes lateral cooperation in two supply chains while most relevant papers have analyzed cooperation in one supply chain. Secondly, we consider lateral cooperation among manufacturers whose short-run manufacturing capacities are limited. Compared with existing literatures, our model is more realistic. Using stochastic comparison method, our results are more general. Lastly, we analyze lateral cooperation in an ATO system with multi-item, multi-product and multi-manufacturer, based on research on single ATO manufacturer. We analyze the performance of this system with queuing theory, solve the manufacturers'optimal inventory decisions with discrete optimization method, and search for the optimal procurement and production decision for ATO manufacturers with limited capacities using genetic algorithm. In one word, our results will enrich research on cooperation and can direct firms'production and cooperation decisions. Our paper not only has theoretical values, but the algorithms also have strong practical values.