IDEAS home Printed from https://ideas.repec.org/a/eee/proeco/v112y2008i2p860-868.html
   My bibliography  Save this article

Supply chain coordination with manufacturer's limited reserve capacity: An extended newsboy problem

Author

Listed:
  • Li, Jianli
  • Liu, Liwen

Abstract

This paper develops an extended newsboy model and presents a coordination decision policy in a supply chain consisting of one manufacturer and one retailer. In order to meet a random demand, the retailer can place a second order at the end of the period if a stock-out occurs. The manufacturer's reserve capacity for the retailer's second order is limited to M units. To maximize each individual's expected profit, the retailer decides his optimal order quantity and the manufacturer decides his optimal reserve capacity. A coordination mechanism is designed which can make the supply chain increase profit. A price discount policy is developed to allocate the expected increased profits between two sides of the supply chain.

Suggested Citation

  • Li, Jianli & Liu, Liwen, 2008. "Supply chain coordination with manufacturer's limited reserve capacity: An extended newsboy problem," International Journal of Production Economics, Elsevier, vol. 112(2), pages 860-868, April.
    • Handle: RePEc:eee:proeco:v:112:y:2008:i:2:p:860-868
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0925-5273(07)00262-9
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Lin, Chen-Sin & Kroll, Dennis E., 1997. "The single-item newsboy problem with dual performance measures and quantity discounts," European Journal of Operational Research, Elsevier, vol. 100(3), pages 562-565, August.
    2. Weng, Z. Kevin, 2004. "Coordinating order quantities between the manufacturer and the buyer: A generalized newsvendor model," European Journal of Operational Research, Elsevier, vol. 156(1), pages 148-161, July.
    3. Li, Jianli & Liu, Liwen, 2006. "Supply chain coordination with quantity discount policy," International Journal of Production Economics, Elsevier, vol. 101(1), pages 89-98, May.
    4. Thomas, Douglas J. & Griffin, Paul M., 1996. "Coordinated supply chain management," European Journal of Operational Research, Elsevier, vol. 94(1), pages 1-15, October.
    5. Zimmer, Kirstin, 2002. "Supply chain coordination with uncertain just-in-time delivery," International Journal of Production Economics, Elsevier, vol. 77(1), pages 1-15, May.
    6. Lee, Chang Hwan, 2007. "Coordination on stocking and progressive pricing policies for a supply chain," International Journal of Production Economics, Elsevier, vol. 106(1), pages 307-319, March.
    7. Scott Webster & Z. Kevin Weng, 2000. "A Risk-free Perishable Item Returns Policy," Manufacturing & Service Operations Management, INFORMS, vol. 2(1), pages 100-106, July.
    8. Mostard, Julien & de Koster, Rene & Teunter, Ruud, 2005. "The distribution-free newsboy problem with resalable returns," International Journal of Production Economics, Elsevier, vol. 97(3), pages 329-342, September.
    9. Qin, Yiyan & Tang, Huanwen & Guo, Chonghui, 2007. "Channel coordination and volume discounts with price-sensitive demand," International Journal of Production Economics, Elsevier, vol. 105(1), pages 43-53, January.
    10. Z. Kevin Weng, 1995. "Channel Coordination and Quantity Discounts," Management Science, INFORMS, vol. 41(9), pages 1509-1522, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Hau, Arthur, 2010. "Comparative statics of changes in risk on monotonically and partially responsive kinked payoffs," European Journal of Operational Research, Elsevier, vol. 201(1), pages 267-276, February.
    2. Li, Sijie & Zhu, Zhanbei & Huang, Lihua, 2009. "Supply chain coordination and decision making under consignment contract with revenue sharing," International Journal of Production Economics, Elsevier, vol. 120(1), pages 88-99, July.
    3. Hung, Yick-Hin & Li, Leon Y.O. & Cheng, T.C.E., 2011. "Trading reserved capacity independently among supply chains," International Journal of Production Economics, Elsevier, vol. 133(1), pages 105-112, September.
    4. Ma, Xiaoyu & Huang, Feiteng & Li, Xue & Zhang, Jihong, 2024. "Optimal contract design in mobile service industry considering network congestion," International Journal of Production Economics, Elsevier, vol. 267(C).
    5. Chou, Yon-Chun & Chung, Hsien-Jung, 2009. "Service-based capacity strategy for manufacturing service duopoly of differentiated prices and lognormal random demand," International Journal of Production Economics, Elsevier, vol. 121(1), pages 162-175, September.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Zhou, Yong-Wu & Min, Jie & Goyal, Suresh K., 2008. "Supply-chain coordination under an inventory-level-dependent demand rate," International Journal of Production Economics, Elsevier, vol. 113(2), pages 518-527, June.
    2. Viktoryia Buhayenko & Dick den Hertog, 2017. "Adjustable Robust Optimisation approach to optimise discounts for multi-period supply chain coordination under demand uncertainty," International Journal of Production Research, Taylor & Francis Journals, vol. 55(22), pages 6801-6823, November.
    3. Salma Karray & Chirag Surti, 2016. "Channel coordination with quantity discounts and/or cooperative advertising," International Journal of Production Research, Taylor & Francis Journals, vol. 54(17), pages 5317-5335, September.
    4. Chen, Jing, 2011. "Returns with wholesale-price-discount contract in a newsvendor problem," International Journal of Production Economics, Elsevier, vol. 130(1), pages 104-111, March.
    5. Hsieh, Chung-Chi & Wu, Cheng-Han, 2008. "Capacity allocation, ordering, and pricing decisions in a supply chain with demand and supply uncertainties," European Journal of Operational Research, Elsevier, vol. 184(2), pages 667-684, January.
    6. Webster, Scott & Kevin Weng, Z., 2008. "Ordering and pricing policies in a manufacturing and distribution supply chain for fashion products," International Journal of Production Economics, Elsevier, vol. 114(2), pages 476-486, August.
    7. Lee, Chang Hwan, 2007. "Coordination on stocking and progressive pricing policies for a supply chain," International Journal of Production Economics, Elsevier, vol. 106(1), pages 307-319, March.
    8. Lau, Amy Hing Ling & Lau, Hon-Shiang & Zhou, Yong-Wu, 2008. "Quantity discount and handling-charge reduction schemes for a manufacturer supplying numerous heterogeneous retailers," International Journal of Production Economics, Elsevier, vol. 113(1), pages 425-445, May.
    9. Sher, Mikhail M. & Kim, Seung-Lae & Banerjee, Avijit & Paz, Michael T., 2018. "A supply chain coordination mechanism for common items subject to failure in the electronics, defense, and medical industries," International Journal of Production Economics, Elsevier, vol. 203(C), pages 164-173.
    10. Weng, Z. Kevin, 2004. "Coordinating order quantities between the manufacturer and the buyer: A generalized newsvendor model," European Journal of Operational Research, Elsevier, vol. 156(1), pages 148-161, July.
    11. Sule Birim & Cigdem Sofyalioglu, 2017. "Evaluating vendor managed inventory systems: how incentives can benefit supply chain partners," Journal of Business Economics and Management, Taylor & Francis Journals, vol. 18(1), pages 163-179, January.
    12. Chaharsooghi, S. Kamal & Heydari, Jafar, 2010. "Supply chain coordination for the joint determination of order quantity and reorder point using credit option," European Journal of Operational Research, Elsevier, vol. 204(1), pages 86-95, July.
    13. Duan, Lisha & Ventura, José A., 2019. "A Dynamic Supplier Selection and Inventory Management Model for a Serial Supply Chain with a Novel Supplier Price Break Scheme and Flexible Time Periods," European Journal of Operational Research, Elsevier, vol. 272(3), pages 979-998.
    14. Konstantin Kogan, 2019. "Discounting revisited: evolutionary perspectives on competition and coordination in a supply chain with multiple retailers," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 27(1), pages 69-92, March.
    15. Heydari, Jafar, 2014. "Lead time variation control using reliable shipment equipment: An incentive scheme for supply chain coordination," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 63(C), pages 44-58.
    16. Bellantuono, Nicola & Giannoccaro, Ilaria & Pontrandolfo, Pierpaolo & Tang, Christopher S., 2009. "The implications of joint adoption of revenue sharing and advance booking discount programs," International Journal of Production Economics, Elsevier, vol. 121(2), pages 383-394, October.
    17. Ponte, Borja & Puche, Julio & Rosillo, Rafael & de la Fuente, David, 2020. "The effects of quantity discounts on supply chain performance: Looking through the Bullwhip lens," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 143(C).
    18. Zhou, Yong-Wu, 2009. "Two-echelon supply chain coordination through the unified number of annual orders," International Journal of Production Economics, Elsevier, vol. 117(1), pages 162-173, January.
    19. L Lei & Q Wang & C Fan, 2006. "Optimal business policies for a supplier–transporter–buyer channel with a price-sensitive demand," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 57(3), pages 281-289, March.
    20. Sarmah, S.P. & Acharya, D. & Goyal, S.K., 2006. "Buyer vendor coordination models in supply chain management," European Journal of Operational Research, Elsevier, vol. 175(1), pages 1-15, November.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:proeco:v:112:y:2008:i:2:p:860-868. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/ijpe .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.