IDEAS home Printed from https://ideas.repec.org/a/eee/proeco/v113y2008i2p785-804.html
   My bibliography  Save this article

The impact of replenishment policy deviations in a decentralized supply chain

Author

Listed:
  • Son, Joong Y.
  • Sheu, Chwen

Abstract

Inter-organizational collaboration has been touted as the driving force behind successful supply chain management. Nonetheless, numerous examples indicate that before all parties in a supply chain can develop full mutual trust and establish an effective governance mechanism, deviations of collaborative agreements from supply chain members is inevitable. The primary objective of this paper is to shed light on the impact of replenishment policy deviations on supply chain performance. We first develop a benchmark case where all supply chain parties follow a base stock policy that maximizes overall supply chain performance. Subsequently, the performance (local as well as system-wide costs and service levels) of various supply chain scenarios that deviate from this benchmark case is examined using simulation methods. The simulation results show that the performance of a decentralized supply chain is contingent on the types of replenishment policies, source of policy deviations, and the interaction of these two factors. Finally, managerial implications for potential supply chain collaboration are discussed.

Suggested Citation

  • Son, Joong Y. & Sheu, Chwen, 2008. "The impact of replenishment policy deviations in a decentralized supply chain," International Journal of Production Economics, Elsevier, vol. 113(2), pages 785-804, June.
  • Handle: RePEc:eee:proeco:v:113:y:2008:i:2:p:785-804
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0925-5273(07)00334-9
    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. Kelle, Peter & Miller, Pamela A. & Akbulut, Asli Y., 2007. "Coordinating ordering/shipment policy for buyer and supplier: Numerical and empirical analysis of influencing factors," International Journal of Production Economics, Elsevier, vol. 108(1-2), pages 100-110, July.
    2. Byrne, P.J. & Heavey, Cathal, 2006. "The impact of information sharing and forecasting in capacitated industrial supply chains: A case study," International Journal of Production Economics, Elsevier, vol. 103(1), pages 420-437, September.
    3. Fernando Bernstein & Awi Federgruen, 2005. "Decentralized Supply Chains with Competing Retailers Under Demand Uncertainty," Management Science, INFORMS, vol. 51(1), pages 18-29, January.
    4. Giannoccaro, Ilaria & Pontrandolfo, Pierpaolo, 2004. "Supply chain coordination by revenue sharing contracts," International Journal of Production Economics, Elsevier, vol. 89(2), pages 131-139, May.
    5. James P. Monahan, 1984. "A Quantity Discount Pricing Model to Increase Vendor Profits," Management Science, INFORMS, vol. 30(6), pages 720-726, June.
    6. Joel H. Steckel & Sunil Gupta & Anirvan Banerji, 2004. "Supply Chain Decision Making: Will Shorter Cycle Times and Shared Point-of-Sale Information Necessarily Help?," Management Science, INFORMS, vol. 50(4), pages 458-464, April.
    7. Ouyang, Yanfeng, 2007. "The effect of information sharing on supply chain stability and the bullwhip effect," European Journal of Operational Research, Elsevier, vol. 182(3), pages 1107-1121, November.
    8. Rachel Croson & Karen Donohue, 2002. "Experimental Economics and Supply-Chain Management," Interfaces, INFORMS, vol. 32(5), pages 74-82, October.
    9. Jeffrey H. Dyer, 1997. "Effective interim collaboration: how firms minimize transaction costs and maximise transaction value," Strategic Management Journal, Wiley Blackwell, vol. 18(7), pages 535-556, August.
    10. Yao, Dong-Qing & Yue, Xiaohang & Wang, Xiaoyin & Liu, John J., 2005. "The impact of information sharing on a returns policy with the addition of a direct channel," International Journal of Production Economics, Elsevier, vol. 97(2), pages 196-209, August.
    11. Evan L. Porteus & Seungjin Whang, 1991. "On Manufacturing/Marketing Incentives," Management Science, INFORMS, vol. 37(9), pages 1166-1181, September.
    12. repec:bla:scandj:v:90:y:1988:i:3:p:275-89 is not listed on IDEAS
    13. Fangruo Chen, 1998. "Echelon Reorder Points, Installation Reorder Points, and the Value of Centralized Demand Information," Management Science, INFORMS, vol. 44(12-Part-2), pages 221-234, December.
    14. Hau L. Lee & Meir J. Rosenblatt, 1986. "A Generalized Quantity Discount Pricing Model to Increase Supplier's Profits," Management Science, INFORMS, vol. 32(9), pages 1177-1185, September.
    15. Kamran Moinzadeh, 2002. "A Multi-Echelon Inventory System with Information Exchange," Management Science, INFORMS, vol. 48(3), pages 414-426, March.
    16. Schneeweiss, Christoph & Zimmer, Kirstin & Zimmermann, Michael, 2004. "The design of contracts to coordinate operational interdependencies within the supply chain," International Journal of Production Economics, Elsevier, vol. 92(1), pages 43-59, November.
    17. Hau L. Lee & Corey Billington, 1993. "Material Management in Decentralized Supply Chains," Operations Research, INFORMS, vol. 41(5), pages 835-847, October.
    18. Sterman, John D., 1989. "Misperceptions of feedback in dynamic decision making," Organizational Behavior and Human Decision Processes, Elsevier, vol. 43(3), pages 301-335, June.
    19. Samaddar, Subhashish & Nargundkar, Satish & Daley, Marcia, 2006. "Inter-organizational information sharing: The role of supply network configuration and partner goal congruence," European Journal of Operational Research, Elsevier, vol. 174(2), pages 744-765, October.
    20. Gérard P. Cachon & Martin A. Lariviere, 2001. "Contracting to Assure Supply: How to Share Demand Forecasts in a Supply Chain," Management Science, INFORMS, vol. 47(5), pages 629-646, May.
    21. Fangruo Chen, 1999. "Decentralized Supply Chains Subject to Information Delays," Management Science, INFORMS, vol. 45(8), pages 1076-1090, August.
    22. Chen, Haoya & Chen, Jian & Chen, Youhua (Frank), 2006. "A coordination mechanism for a supply chain with demand information updating," International Journal of Production Economics, Elsevier, vol. 103(1), pages 347-361, September.
    23. Hau Lee & Seungjin Whang, 1999. "Decentralized Multi-Echelon Supply Chains: Incentives and Information," Management Science, INFORMS, vol. 45(5), pages 633-640, May.
    24. Miragliotta, Giovanni, 2006. "Layers and mechanisms: A new taxonomy for the Bullwhip Effect," International Journal of Production Economics, Elsevier, vol. 104(2), pages 365-381, December.
    25. John D. Sterman, 1987. "Testing Behavioral Simulation Models by Direct Experiment," Management Science, INFORMS, vol. 33(12), pages 1572-1592, December.
    26. Abel P. Jeuland & Steven M. Shugan, 1983. "Managing Channel Profits," Marketing Science, INFORMS, vol. 2(3), pages 239-272.
    27. Andrew J. Clark & Herbert Scarf, 2004. "Optimal Policies for a Multi-Echelon Inventory Problem," Management Science, INFORMS, vol. 50(12_supple), pages 1782-1790, December.
    28. John D. Sterman, 1989. "Modeling Managerial Behavior: Misperceptions of Feedback in a Dynamic Decision Making Experiment," Management Science, INFORMS, vol. 35(3), pages 321-339, March.
    29. Riyaz Sikora & Michael J. Shaw, 1998. "A Multi-Agent Framework for the Coordination and Integration of Information Systems," Management Science, INFORMS, vol. 44(11-Part-2), pages 65-78, November.
    30. Disney, S. M. & Towill, D. R., 2003. "The effect of vendor managed inventory (VMI) dynamics on the Bullwhip Effect in supply chains," International Journal of Production Economics, Elsevier, vol. 85(2), pages 199-215, August.
    31. Z. Kevin Weng, 1995. "Channel Coordination and Quantity Discounts," Management Science, INFORMS, vol. 41(9), pages 1509-1522, September.
    32. Groves, Theodore, 1973. "Incentives in Teams," Econometrica, Econometric Society, vol. 41(4), pages 617-631, July.
    33. Theodore Groves & Martin Loeb, 1979. "Incentives in a Divisionalized Firm," Management Science, INFORMS, vol. 25(3), pages 221-230, March.
    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. Hill, Alex & Doran, Des & Stratton, Roy, 2012. "How should you stabilise your supply chains?," International Journal of Production Economics, Elsevier, vol. 135(2), pages 870-881.
    2. Durowoju, Olatunde A. & Chan, Hing Kai & Wang, Xiaojun & Akenroye, Temidayo, 2021. "Supply chain redesign implications to information disruption impact," International Journal of Production Economics, Elsevier, vol. 232(C).

    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. Fangruo Chen, 1999. "Decentralized Supply Chains Subject to Information Delays," Management Science, INFORMS, vol. 45(8), pages 1076-1090, August.
    2. Li, Xiuhui & Wang, Qinan, 2007. "Coordination mechanisms of supply chain systems," European Journal of Operational Research, Elsevier, vol. 179(1), pages 1-16, May.
    3. Wang, Xun & Disney, Stephen M., 2016. "The bullwhip effect: Progress, trends and directions," European Journal of Operational Research, Elsevier, vol. 250(3), pages 691-701.
    4. Noel Watson & Yu-Sheng Zheng, 2005. "Decentralized Serial Supply Chains Subject to Order Delays and Information Distortion: Exploiting Real-Time Sales Data," Manufacturing & Service Operations Management, INFORMS, vol. 7(2), pages 152-168, May.
    5. Schneeweiss, Christoph & Zimmer, Kirstin, 2004. "Hierarchical coordination mechanisms within the supply chain," European Journal of Operational Research, Elsevier, vol. 153(3), pages 687-703, March.
    6. A. V. Thomas & Biswajit Mahanty, 2021. "Dynamic assessment of control system designs of information shared supply chain network experiencing supplier disruption," Operational Research, Springer, vol. 21(1), pages 425-451, March.
    7. Gupta, Diwakar & Weerawat, Waressara, 2006. "Supplier-manufacturer coordination in capacitated two-stage supply chains," European Journal of Operational Research, Elsevier, vol. 175(1), pages 67-89, November.
    8. de Kok, Ton & Grob, Christopher & Laumanns, Marco & Minner, Stefan & Rambau, Jörg & Schade, Konrad, 2018. "A typology and literature review on stochastic multi-echelon inventory models," European Journal of Operational Research, Elsevier, vol. 269(3), pages 955-983.
    9. Zhao, Yingshuai & Zhao, Xiaobo, 2015. "On human decision behavior in multi-echelon inventory management," International Journal of Production Economics, Elsevier, vol. 161(C), pages 116-128.
    10. Ryu, Seung-Jin & Tsukishima, Takahiro & Onari, Hisashi, 2009. "A study on evaluation of demand information-sharing methods in supply chain," International Journal of Production Economics, Elsevier, vol. 120(1), pages 162-175, July.
    11. Charles L. Munson & Jianli Hu & Meir J. Rosenblatt, 2003. "Teaching the Costs of Uncoordinated Supply Chains," Interfaces, INFORMS, vol. 33(3), pages 24-39, June.
    12. Fernando Bernstein & Awi Federgruen, 2003. "Pricing and Replenishment Strategies in a Distribution System with Competing Retailers," Operations Research, INFORMS, vol. 51(3), pages 409-426, June.
    13. 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.
    14. Cantor, David E. & Katok, Elena, 2012. "Production smoothing in a serial supply chain: A laboratory investigation," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 48(4), pages 781-794.
    15. Rachel Croson & Karen Donohue, 2006. "Behavioral Causes of the Bullwhip Effect and the Observed Value of Inventory Information," Management Science, INFORMS, vol. 52(3), pages 323-336, March.
    16. Leng, Mingming & Zhu, An, 2009. "Side-payment contracts in two-person nonzero-sum supply chain games: Review, discussion and applications," European Journal of Operational Research, Elsevier, vol. 196(2), pages 600-618, July.
    17. Wang, Jian-Cai & Lau, Hon-Shiang & Lau, Amy Hing Ling, 2008. "How a retailer should manipulate a dominant manufacturer's perception of market and cost parameters," International Journal of Production Economics, Elsevier, vol. 116(1), pages 43-60, November.
    18. Fangruo Chen & Awi Federgruen & Yu-Sheng Zheng, 2001. "Coordination Mechanisms for a Distribution System with One Supplier and Multiple Retailers," Management Science, INFORMS, vol. 47(5), pages 693-708, May.
    19. Enrique Holgado de Frutos & Juan R Trapero & Francisco Ramos, 2020. "A literature review on operational decisions applied to collaborative supply chains," PLOS ONE, Public Library of Science, vol. 15(3), pages 1-28, March.
    20. Evan L. Porteus, 2000. "Responsibility Tokens in Supply Chain Management," Manufacturing & Service Operations Management, INFORMS, vol. 2(2), pages 203-219, October.

    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:113:y:2008:i:2:p:785-804. 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.