Supply Chain Decision-making With Trade-off Between Profit And Reliability

Under the tide of economic globalization,the competitive environment is increasingly complex.It is difficult for enterprises to gain competitive advantage based on their own strength.The competition among enterprises is gradually rising to competition among supply chains.However,the supply chain is a complex structure composed of multiple levels and multiple members.The problem of one node directly affects the upstream and downstream enterprises,and further affects the entire system.Improving the reliability of the supply chain system while pursuing profits has become an important means of enhancing competitiveness.In this context,this paper defines the reliability of the supply chain as the ability to complete orders according to regulations,and pays attention to the coordination of the profit and reliability of the supply chain system.In this paper,we consider a two-stage supply chain system consisting of one manufacturer and multiple retailers.The manufacturer produces multiple types products,and makes to order(MTO).Based on this condition,this paper analyzes the difference among the independent production system,the first-come first-served(FCFS)strategy and the same order priority service(SOPS)strategy of the flexible production system,by using stochastic processes,queuing theory and simulation.Here are the conclusions of this paper:1)In the independent production system,reliability improves with pricing and production speed,but profits may be impaired.There is conflict between reliability and profit.Hence,it’s necessary to consider the trade-off between profit and reliability,and to consider the object after weighing profit and reliability.We found that a little loss of profits can lead an obvious increase in reliability.From the long-term trend,the difference in profit between the maximum profit and object is small.Attention should be paid to reliability besides the profit,which can reduce the fluctuation of profit,reduce risks,and ensure stable operation of the supply chain.However,when the reliability reaches a certain level,further improvement requires more effort,and need more redundant production capacity,those will cause higher costs and serious profit damage,so the attention paid to reliability should be proper.2)When flexible production systems are used in many types of products,there are optimal decisions to maximize profits and objectives under both FCFS strategy and SOPS strategy.The optimal profit,reliability and object of FCFS strategy and SOPS strategy under profit maximization and object maximization all decrease with the increase of switching time.Under the SOPS strategy,by increasing the number of orders allowed to cut the queue,the impact of switching time on profit,reliability and target can be reduced.3)When there is a constraint on production capacity,both independent production system and flexible production system(using FCFS strategy and SOPS strategy)have the decision of maximizing profit and object.Comparing the optimal decision under profit maximization and object maximization,it is found that under the constraint of production capacity,we still need to pay more attention to reliability in addition to profit maximization,and pursue suboptimal profit by maximizing decision through the object.Improve the reliability of the supply chain system.Comparing the independent production system with the flexible production system under different strategies,we found that under the constraint of production capacity,when the switching time between different types of products is short.Compared with the independent production system,the flexible production system can obtain better profit and reliability in the case of profit maximization and object maximization,but with the increase of switching time,the flexible production system gradually becomes uneconomical.In general,in order to ensure the continuous and stable operation of the supply chain,it is necessary to give appropriate attention to reliability.Pursuing suboptimal profits rather the optimal profit can significantly improve supply chain reliability with little profit loss.The flexible production system can gather the production capacity to complete the order,therefore,if the difference between products is small and the equipment switching time is short,the flexible production system can improve profit and reliability.The overall profit,reliability and object can be further improved by allowing certain orders which have same type to cut the line,if the difference is relatively larger.The result provides a certain theoretical support for the supply chain members to change their pursuit of maximum profit,and pay attention to reliability and suboptimal profits,and provides some guidance for the pricing and production decisions of supply chain enterprises.Based on the reliability considerations,this paper analyzes the decision-making under different production modes and strategies,and obtains some valuable results when considering the trade-off between profit and reliability,but this paper assumes that different types products are independent,there is no substitution,and orders have the same priority,that may need to be relaxed in further research.Besides,the allocating among different types products under the capacity constraints,the boundary of the strategies need to be explored.