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A note on the effectiveness of scheduled balanced ordering in a one-supplier two-retailer system with uniform end-customer demands

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  • Chen, Lucy Gongtao
  • Gavirneni, Srinagesh

Abstract

For a decentralized supply chain with one supplier and two retailers that face uniformly distributed end-customer demands, a scheduled balanced ordering policy (SBOP) is one in which the two retailers take turns to order freely in one period of a two-period cycle, and receive a fixed shipment in the other period. We develop mathematical conditions, on the supplier and retailer cost parameters, that predict the effectiveness of the SBOP strategy in reducing total supply chain cost. We find that SBOP is often effective when the supplier has cost parameters larger than the retailers. We also show that SBOP can be effective even when there is no information sharing in the supply chain. Further, the effectiveness of SBOP is robust with respect to demand assumptions.

Suggested Citation

  • Chen, Lucy Gongtao & Gavirneni, Srinagesh, 2013. "A note on the effectiveness of scheduled balanced ordering in a one-supplier two-retailer system with uniform end-customer demands," International Journal of Production Economics, Elsevier, vol. 146(1), pages 240-245.
    • Handle: RePEc:eee:proeco:v:146:y:2013:i:1:p:240-245
    DOI: 10.1016/j.ijpe.2013.07.004
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    References listed on IDEAS

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    1. Hau L. Lee & Kut C. So & Christopher S. Tang, 2000. "The Value of Information Sharing in a Two-Level Supply Chain," Management Science, INFORMS, vol. 46(5), pages 626-643, May.
    2. Gérard P. Cachon, 1999. "Managing Supply Chain Demand Variability with Scheduled Ordering Policies," Management Science, INFORMS, vol. 45(6), pages 843-856, June.
    3. Lucy Gongtao Chen & Srinagesh Gavirneni, 2010. "Using Scheduled Ordering to Improve the Performance of Distribution Supply Chains," Management Science, INFORMS, vol. 56(9), pages 1615-1632, September.
    4. Srinagesh Gavirneni & Roman Kapuscinski & Sridhar Tayur, 1999. "Value of Information in Capacitated Supply Chains," Management Science, INFORMS, vol. 45(1), pages 16-24, January.
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