IDEAS home Printed from https://ideas.repec.org/a/eee/proeco/v137y2012i1p45-54.html
   My bibliography  Save this article

Impact of transportation contract on inventory systems with demand cancellation

Author

Listed:
  • Yeo, Wee Meng
  • Yuan, Xue-Ming

Abstract

Supply contracts often specify the quantity of inventory for shipments where retailers are liable to pay for ordering costs if order quantity exceeds the contracted size. We analyze a periodic review system where the firm manages its demand that are reserved with a one-period leadtime together with a multi-tier supply contract. We show that the optimal inventory policy has the primary structure of “finite generalized base stock” policy whose critical numbers depend on reservation parameters. The single, multiple periods and the infinite horizon models are studied. The presence of ordering costs needs a different approach from that in Yuan and Cheung (2003) to analyze the infinite horizon model.

Suggested Citation

  • Yeo, Wee Meng & Yuan, Xue-Ming, 2012. "Impact of transportation contract on inventory systems with demand cancellation," International Journal of Production Economics, Elsevier, vol. 137(1), pages 45-54.
    • Handle: RePEc:eee:proeco:v:137:y:2012:i:1:p:45-54
    DOI: 10.1016/j.ijpe.2011.12.028
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0925527312000126
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.ijpe.2011.12.028?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    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. Yeo, Wee Meng & Yuan, Xue-Ming, 2011. "Optimal inventory policy with supply uncertainty and demand cancellation," European Journal of Operational Research, Elsevier, vol. 211(1), pages 26-34, May.
    2. Chiang, Chi & Gutierrez, Genaro J., 1996. "A periodic review inventory system with two supply modes," European Journal of Operational Research, Elsevier, vol. 94(3), pages 527-547, November.
    3. Xiuli Chao & Paul H. Zipkin, 2008. "Optimal Policy for a Periodic-Review Inventory System Under a Supply Capacity Contract," Operations Research, INFORMS, vol. 56(1), pages 59-68, February.
    4. Mordechai Henig & Yigal Gerchak & Ricardo Ernst & David F. Pyke, 1997. "An Inventory Model Embedded in Designing a Supply Contract," Management Science, INFORMS, vol. 43(2), pages 184-189, February.
    5. Yoichiro Fukuda, 1964. "Optimal Policies for the Inventory Problem with Negotiable Leadtime," Management Science, INFORMS, vol. 10(4), pages 690-708, July.
    6. Lian, Zhaotong & Deshmukh, Abhijit, 2009. "Analysis of supply contracts with quantity flexibility," European Journal of Operational Research, Elsevier, vol. 196(2), pages 526-533, July.
    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. Mou, Shandong & Robb, David J. & DeHoratius, Nicole, 2018. "Retail store operations: Literature review and research directions," European Journal of Operational Research, Elsevier, vol. 265(2), pages 399-422.
    2. Wang, Xuping & Ruan, Junhu & Shi, Yan, 2012. "A recovery model for combinational disruptions in logistics delivery: Considering the real-world participators," International Journal of Production Economics, Elsevier, vol. 140(1), pages 508-520.

    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. Zhaotong Lian & Liming Liu & Stuart X. Zhu, 2010. "Rolling‐horizon replenishment: Policies and performance analysis," Naval Research Logistics (NRL), John Wiley & Sons, vol. 57(6), pages 489-502, September.
    2. Dong, Chuanwen & Transchel, Sandra, 2020. "A dual sourcing inventory model for modal split transport: Structural properties and optimal solution," European Journal of Operational Research, Elsevier, vol. 283(3), pages 883-900.
    3. Huang, Shuo & Axsäter, Sven & Dou, Yifan & Chen, Jian, 2011. "A real-time decision rule for an inventory system with committed service time and emergency orders," European Journal of Operational Research, Elsevier, vol. 215(1), pages 70-79, November.
    4. Lee, Jun-Yeon & Schwarz, Leroy B., 2009. "Leadtime management in a periodic-review inventory system: A state-dependent base-stock policy," European Journal of Operational Research, Elsevier, vol. 199(1), pages 122-129, November.
    5. Peng Hu & Ye Lu & Miao Song, 2019. "Joint Pricing and Inventory Control with Fixed and Convex/Concave Variable Production Costs," Production and Operations Management, Production and Operations Management Society, vol. 28(4), pages 847-877, April.
    6. Svoboda, Josef & Minner, Stefan & Yao, Man, 2021. "Typology and literature review on multiple supplier inventory control models," European Journal of Operational Research, Elsevier, vol. 293(1), pages 1-23.
    7. Zhu, Stuart X., 2012. "Joint pricing and inventory replenishment decisions with returns and expediting," European Journal of Operational Research, Elsevier, vol. 216(1), pages 105-112.
    8. Chand, Suresh & Li, Jian & Xu, Yanyi, 2016. "A periodic review inventory model with two delivery modes, fractional lead-times, and age-and-period-dependent backlogging costs," International Journal of Production Economics, Elsevier, vol. 173(C), pages 199-206.
    9. Xu, Ningxiong, 2008. "Myopic policy for a two-product and multi-period supply contract with different delivery lead times and storage limitation," International Journal of Production Economics, Elsevier, vol. 115(1), pages 179-188, September.
    10. Ozgun Caliskan-Demirag & Youhua (Frank) Chen & Yi Yang, 2012. "Ordering Policies for Periodic-Review Inventory Systems with Quantity-Dependent Fixed Costs," Operations Research, INFORMS, vol. 60(4), pages 785-796, August.
    11. Vlachos, Dimitrios & Tagaras, George, 2001. "An inventory system with two supply modes and capacity constraints," International Journal of Production Economics, Elsevier, vol. 72(1), pages 41-58, June.
    12. Lee, L.H. & Lee, C. & Bao, J., 2006. "Inventory control in the presence of an electronic marketplace," European Journal of Operational Research, Elsevier, vol. 174(2), pages 797-815, October.
    13. Chi Chiang & Genaro J. Gutierrez, 1998. "Optimal control policies for a periodic review inventory system with emergency orders," Naval Research Logistics (NRL), John Wiley & Sons, vol. 45(2), pages 187-204, March.
    14. Ozgun Caliskan-Demirag & Youhua Chen & Yi Yang, 2013. "Production-inventory control policy under warm/cold state-dependent fixed costs and stochastic demand: partial characterization and heuristics," Annals of Operations Research, Springer, vol. 208(1), pages 531-556, September.
    15. Jian Yang & Xiangtong Qi & Yusen Xia, 2005. "A Production-Inventory System with Markovian Capacity and Outsourcing Option," Operations Research, INFORMS, vol. 53(2), pages 328-349, April.
    16. Minner, Stefan, 2003. "Multiple-supplier inventory models in supply chain management: A review," International Journal of Production Economics, Elsevier, vol. 81(1), pages 265-279, January.
    17. Pedrielli, Giulia & Lee, Loo Hay & Ng, Szu Hui, 2015. "Optimal bunkering contract in a buyer–seller supply chain under price and consumption uncertainty," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 77(C), pages 77-94.
    18. Bhatnagar, Rohit & Mehta, Peeyush & Chong Teo, Chee, 2011. "Coordination of planning and scheduling decisions in global supply chains with dual supply modes," International Journal of Production Economics, Elsevier, vol. 131(2), pages 473-482, June.
    19. Cheaitou, Ali & van Delft, Christian, 2013. "Finite horizon stochastic inventory problem with dual sourcing: Near myopic and heuristics bounds," International Journal of Production Economics, Elsevier, vol. 143(2), pages 371-378.
    20. Scheller-Wolf, Alan & Tayur, Sridhar, 2009. "Risk sharing in supply chains using order bands--Analytical results and managerial insights," International Journal of Production Economics, Elsevier, vol. 121(2), pages 715-727, October.

    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:137:y:2012:i:1:p:45-54. 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.