A Research On The Coordination Strategy Of The Single Supplier, Multi-Buyers System In Supply Chain

With the supply chain management carrying into extensively, more and more research developed on the coordination strategy in the supply chain system. In system both the supplier and buyer desire to make decisions that maximize their individual expected profits, which lead to the dual marginal effect utility and Bullwhip effect. However, growing competition and shrinking profit margins impel both parties to consider coordinating their decision. The coordinated ordering/inventory policies are maximizes the expected profits of the supplier and buyer. The focus of this paper is to address the following managerial questions: under consider random demand what factors make coordination an effective strategy for both supplier and buyer? What are the coordination strategies and the coordinated policies that maximize both parties'expected profits and joint expected profit? If consider multi-buyers condition, how use the quantity discount to improve the joint profit?The paper is organized as follows. The following section discusses the focus of this study and related literature. The second section we recall some of the results that pertain to stochastic inventory policy in the supply chain.The third section we address the case where the buyer formulate the remand inventory policy (Q, R).The demand faced by the buyer is assumed to be stochastic, including some related deductions are presented in this section.Based on the former section, in the fourth section of this paper we consider a single-supplier, single-buyer distribution channel. Supplier and buyer make union decision maximize the system total profit, because union decision could bring more system profit than the separated decision. We develop profit-share policy and quality discount policy as the coordination strategy to ensure the union decision. And then we illustrate the models and provide some insights using numerical examples.Compared with the single-supplier, single-buyer problem, the single-supplier, multi-buyers problem is more practicality complex. The fifth section discusses the cooperation between single supplier and multi-buyers. We start with the case where the ordering schedule of buyers is not coordinated and determine the optimal parameters that maximize the joint (system) profit. Later we consider the case where the discount policy is structured such that the buyers are encouraged to coordinate the timing of their orders. For the case of identical buyers, we show that the order coordination always leads to increase in the system profits. However, with heterogeneous buyers, we derive the sufficiency conditions that determine when"order coordination"would be preferable. A numerical example illustrating the benefit of"order coordination"is also presented.