IDEAS home Printed from https://ideas.repec.org/a/eee/transe/v63y2014icp44-58.html
   My bibliography  Save this article

Lead time variation control using reliable shipment equipment: An incentive scheme for supply chain coordination

Author

Listed:
  • Heydari, Jafar

Abstract

In this paper, service level coordination is studied in a two-stage supply chain (SC). In the investigated model, a retailer is faced with uncertain lead time (LT) due to shipping time instability. Reducing lead time fluctuations is used as an incentive scheme to induce the retailer for participation in the coordination plan. Range of LT fluctuation which is acceptable for both parties is extracted. It is shown that using more reliable shipping equipment as an incentive could coordinate SC. Under some circumstances, the proposed model can increase SC profitability more than centralized decision making model.

Suggested Citation

  • 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.
    • Handle: RePEc:eee:transe:v:63:y:2014:i:c:p:44-58
    DOI: 10.1016/j.tre.2014.01.004
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1366554514000118
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.tre.2014.01.004?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. Chang, Ching-Ter, 2005. "A linearization approach for inventory models with variable lead time," International Journal of Production Economics, Elsevier, vol. 96(2), pages 263-272, May.
    2. Chang, Hung-Chi & Ouyang, Liang-Yuh & Wu, Kun-Shan & Ho, Chia-Huei, 2006. "Integrated vendor-buyer cooperative inventory models with controllable lead time and ordering cost reduction," European Journal of Operational Research, Elsevier, vol. 170(2), pages 481-495, April.
    3. Özkaya, Evren & Keskinocak, PInar & Roshan Joseph, V. & Weight, Ryan, 2010. "Estimating and benchmarking Less-than-Truckload market rates," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 46(5), pages 667-682, September.
    4. Garg, D. & Narahari, Y. & Viswanadham, N., 2006. "Achieving sharp deliveries in supply chains through variance pool allocation," European Journal of Operational Research, Elsevier, vol. 171(1), pages 227-254, May.
    5. Z. Kevin Weng, 1995. "Channel Coordination and Quantity Discounts," Management Science, INFORMS, vol. 41(9), pages 1509-1522, September.
    6. Glock, Christoph H., 2012. "Lead time reduction strategies in a single-vendor–single-buyer integrated inventory model with lot size-dependent lead times and stochastic demand," International Journal of Production Economics, Elsevier, vol. 136(1), pages 37-44.
    7. Bertolini, Massimo & Bottani, Eleonora & Rizzi, Antonio & Bevilacqua, Maurizio, 2007. "Lead time reduction through ICT application in the footwear industry: A case study," International Journal of Production Economics, Elsevier, vol. 110(1-2), pages 198-212, October.
    8. Benton, W. C. & Park, Seungwook, 1996. "A classification of literature on determining the lot size under quantity discounts," European Journal of Operational Research, Elsevier, vol. 92(2), pages 219-238, July.
    9. Chauhan, Satyaveer S. & Proth, Jean-Marie, 2005. "Analysis of a supply chain partnership with revenue sharing," International Journal of Production Economics, Elsevier, vol. 97(1), pages 44-51, July.
    10. Hayya, Jack C. & Harrison, Terry P. & He, X. James, 2011. "The impact of stochastic lead time reduction on inventory cost under order crossover," European Journal of Operational Research, Elsevier, vol. 211(2), pages 274-281, June.
    11. Saha, Subrata, 2013. "Supply chain coordination through rebate induced contracts," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 50(C), pages 120-137.
    12. Hsu, Shu-Lu & Lee, Chun Chen, 2009. "Replenishment and lead time decisions in manufacturer-retailer chains," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 45(3), pages 398-408, May.
    13. Wong, W.K. & Qi, J. & Leung, S.Y.S., 2009. "Coordinating supply chains with sales rebate contracts and vendor-managed inventory," International Journal of Production Economics, Elsevier, vol. 120(1), pages 151-161, July.
    14. Li, Xiaopeng, 2013. "An integrated modeling framework for design of logistics networks with expedited shipment services," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 56(C), pages 46-63.
    15. Leng, Mingming & Parlar, Mahmut, 2009. "Lead-time reduction in a two-level supply chain: Non-cooperative equilibria vs. coordination with a profit-sharing contract," International Journal of Production Economics, Elsevier, vol. 118(2), pages 521-544, April.
    16. Chaharsooghi, S. Kamal & Heydari, Jafar, 2010. "LT variance or LT mean reduction in supply chain management: Which one has a higher impact on SC performance?," International Journal of Production Economics, Elsevier, vol. 124(2), pages 475-481, April.
    17. Glock, C. H., 2012. "Lead time reduction strategies in a single-vendor-single-buyer integrated inventory model with lot size-dependent lead times and stochastic demand," Publications of Darmstadt Technical University, Institute for Business Studies (BWL) 57816, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL).
    18. Huang, Yeu-Shiang & Su, Wei-Jun & Lin, Zu-Liang, 2011. "A study on lead-time discount coordination for deteriorating products," European Journal of Operational Research, Elsevier, vol. 215(2), pages 358-366, December.
    19. Mesa-Arango, Rodrigo & Ukkusuri, Satish V., 2013. "Benefits of in-vehicle consolidation in less than truckload freight transportation operations," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 60(C), pages 113-125.
    20. Li, Yina & Xu, Xuejun & Zhao, Xiande & Yeung, Jeff Hoi Yan & Ye, Fei, 2012. "Supply chain coordination with controllable lead time and asymmetric information," European Journal of Operational Research, Elsevier, vol. 217(1), pages 108-119.
    21. 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.
    22. J C-H Pan & Y-C Hsiao & C-J Lee, 2002. "Inventory models with fixed and variable lead time crash costs considerations," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 53(9), pages 1048-1053, September.
    23. Duan, Yongrui & Luo, Jianwen & Huo, Jiazhen, 2010. "Buyer-vendor inventory coordination with quantity discount incentive for fixed lifetime product," International Journal of Production Economics, Elsevier, vol. 128(1), pages 351-357, November.
    24. Palsule-Desai, Omkar D., 2013. "Supply chain coordination using revenue-dependent revenue sharing contracts," Omega, Elsevier, vol. 41(4), pages 780-796.
    25. 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.
    26. Forkenbrock, David J., 2001. "Comparison of external costs of rail and truck freight transportation," Transportation Research Part A: Policy and Practice, Elsevier, vol. 35(4), pages 321-337, May.
    27. Chen, Jing & Bell, Peter C., 2011. "Coordinating a decentralized supply chain with customer returns and price-dependent stochastic demand using a buyback policy," European Journal of Operational Research, Elsevier, vol. 212(2), pages 293-300, July.
    28. Pan, Jason Chao-Hsien & Lo, Ming-Cheng & Hsiao, Yu-Cheng, 2004. "Optimal reorder point inventory models with variable lead time and backorder discount considerations," European Journal of Operational Research, Elsevier, vol. 158(2), pages 488-505, October.
    29. Tsai, Jung-Fa, 2007. "An optimization approach for supply chain management models with quantity discount policy," European Journal of Operational Research, Elsevier, vol. 177(2), pages 982-994, March.
    30. 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.
    31. Ryu, Si Wook & Lee, Kyung Keun, 2003. "A stochastic inventory model of dual sourced supply chain with lead-time reduction," International Journal of Production Economics, Elsevier, vol. 81(1), pages 513-524, January.
    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. Jian, Ming & Fang, Xin & Jin, Liu-qian & Rajapov, Azamat, 2015. "The impact of lead time compression on demand forecasting risk and production cost: A newsvendor model," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 84(C), pages 61-72.
    2. Bandaly, Dia & Satir, Ahmet & Shanker, Latha, 2016. "Impact of lead time variability in supply chain risk management," International Journal of Production Economics, Elsevier, vol. 180(C), pages 88-100.
    3. Sajjad Aslani Khiavi & Hamid Khaloozadeh & Fahimeh Soltanian, 2021. "Suboptimal sliding manifold For nonlinear supply chain with time delay," Journal of Combinatorial Optimization, Springer, vol. 42(1), pages 151-173, July.
    4. Zhai, Yue & Hua, Guowei & Cheng, Meng & Cheng, T.C.E., 2023. "Production lead-time hedging and order allocation in an MTO supply chain," European Journal of Operational Research, Elsevier, vol. 311(3), pages 887-905.
    5. Zhai, Yue & Cheng, T.C.E., 2022. "Lead-time quotation and hedging coordination in make-to-order supply chain," European Journal of Operational Research, Elsevier, vol. 300(2), pages 449-460.
    6. Asif Iqbal Malik & Biswajit Sarkar, 2020. "Coordination Supply Chain Management Under Flexible Manufacturing, Stochastic Leadtime Demand, and Mixture of Inventory," Mathematics, MDPI, vol. 8(6), pages 1-32, June.
    7. Songtao Zhang & Yanting Hou & Siqi Zhang & Min Zhang, 2017. "Fuzzy Control Model and Simulation for Nonlinear Supply Chain System with Lead Times," Complexity, Hindawi, vol. 2017, pages 1-11, September.
    8. Christian Wankmüller & Gerald Reiner, 2020. "Coordination, cooperation and collaboration in relief supply chain management," Journal of Business Economics, Springer, vol. 90(2), pages 239-276, March.
    9. Sadeghi, Javad & Mousavi, Seyed Mohsen & Niaki, Seyed Taghi Akhavan & Sadeghi, Saeid, 2014. "Optimizing a bi-objective inventory model of a three-echelon supply chain using a tuned hybrid bat algorithm," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 70(C), pages 274-292.
    10. Farnoush Farajpour & Mohammad Taghi Taghavifard & Amir Yousefli & Mohammad Reza Taghva, 2018. "Information Sharing Assessment in Supply Chain: Hierarchical Fuzzy Rule-Based System," Journal of Information & Knowledge Management (JIKM), World Scientific Publishing Co. Pte. Ltd., vol. 17(01), pages 1-24, March.
    11. Jian Li & Lu Liu & Hao Hu & Qiuhong Zhao & Libin Guo, 2018. "An Inventory Model for Deteriorating Drugs with Stochastic Lead Time," IJERPH, MDPI, vol. 15(12), pages 1-20, December.
    12. Zhai, Yue & Choi, Tsan-Ming & Shao, Saijun & Xu, Su Xiu & Huang, George Q., 2020. "Spatial-temporal hedging coordination in prefabricated housing production," International Journal of Production Economics, Elsevier, vol. 229(C).
    13. Nematollahi, Mohammadreza & Hosseini-Motlagh, Seyyed-Mahdi & Heydari, Jafar, 2017. "Coordination of social responsibility and order quantity in a two-echelon supply chain: A collaborative decision-making perspective," International Journal of Production Economics, Elsevier, vol. 184(C), pages 107-121.
    14. Asif Iqbal Malik & Biswajit Sarkar, 2019. "Coordinating Supply-Chain Management under Stochastic Fuzzy Environment and Lead-Time Reduction," Mathematics, MDPI, vol. 7(5), pages 1-28, May.
    15. Ke Ma & Sébastien Thomassey & Xianyi Zeng, 2020. "Development of a central order processing system for optimizing demand-driven textile supply chains: a real case based simulation study," Annals of Operations Research, Springer, vol. 291(1), pages 627-656, August.
    16. Yue Zhai & Ray Y. Zhong & Zhi Li & George Huang, 2017. "Production lead-time hedging and coordination in prefabricated construction supply chain management," International Journal of Production Research, Taylor & Francis Journals, vol. 55(14), pages 3984-4002, July.
    17. Xiao, Tiaojun & Choi, Tsan-Ming & Cheng, T.C.E., 2016. "Delivery leadtime and channel structure decisions for make-to-order duopoly under different game scenarios," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 87(C), pages 113-129.
    18. Sun, X.T. & Chung, S.H. & Chan, Felix T.S. & Wang, Zheng, 2018. "The impact of liner shipping unreliability on the production–distribution scheduling of a decentralized manufacturing system," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 114(C), pages 242-269.
    19. Liu, Mengqi & Cao, Erbao & Salifou, Coulibaly Kigbajah, 2016. "Pricing strategies of a dual-channel supply chain with risk aversion," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 90(C), pages 108-120.
    20. Yang, Lei & Tang, Ruihong, 2019. "Comparisons of sales modes for a fresh product supply chain with freshness-keeping effort," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 125(C), pages 425-448.
    21. Heydari, Jafar & Mahmoodi, Mansour & Taleizadeh, Ata Allah, 2016. "Lead time aggregation: A three-echelon supply chain model," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 89(C), pages 215-233.
    22. Marjia Haque & Sanjoy Kumar Paul & Ruhul Sarker & Daryl Essam, 2022. "A combined approach for modeling multi-echelon multi-period decentralized supply chain," Annals of Operations Research, Springer, vol. 315(2), pages 1665-1702, August.

    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. Jian, Ming & Fang, Xin & Jin, Liu-qian & Rajapov, Azamat, 2015. "The impact of lead time compression on demand forecasting risk and production cost: A newsvendor model," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 84(C), pages 61-72.
    2. K. F. Mary Latha & M. Ganesh Kumar & R. Uthayakumar, 2021. "Two echelon economic lot sizing problems with geometric shipment policy backorder price discount and optimal investment to reduce ordering cost," OPSEARCH, Springer;Operational Research Society of India, vol. 58(4), pages 1133-1163, December.
    3. S. Sarkar & B. C. Giri, 2020. "A vendor–buyer integrated inventory system with variable lead time and uncertain market demand," Operational Research, Springer, vol. 20(1), pages 491-515, March.
    4. Ventura, José A. & Bunn, Kevin A. & Venegas, Bárbara B. & Duan, Lisha, 2021. "A coordination mechanism for supplier selection and order quantity allocation with price-sensitive demand and finite production rates," International Journal of Production Economics, Elsevier, vol. 233(C).
    5. Sajjad Aslani Khiavi & Hamid Khaloozadeh & Fahimeh Soltanian, 2021. "Suboptimal sliding manifold For nonlinear supply chain with time delay," Journal of Combinatorial Optimization, Springer, vol. 42(1), pages 151-173, July.
    6. Nematollahi, Mohammadreza & Hosseini-Motlagh, Seyyed-Mahdi & Heydari, Jafar, 2017. "Coordination of social responsibility and order quantity in a two-echelon supply chain: A collaborative decision-making perspective," International Journal of Production Economics, Elsevier, vol. 184(C), pages 107-121.
    7. Rabin Kumar Mallick & Kartik Patra & Shyamal Kumar Mondal, 2020. "Mixture inventory model of lost sale and back-order with stochastic lead time demand on permissible delay in payments," Annals of Operations Research, Springer, vol. 292(1), pages 341-369, September.
    8. 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.
    9. 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.
    10. Soumya Kanti Hota & Biswajit Sarkar & Santanu Kumar Ghosh, 2020. "Effects of Unequal Lot Size and Variable Transportation in Unreliable Supply Chain Management," Mathematics, MDPI, vol. 8(3), pages 1-24, March.
    11. Songtao Zhang & Yanting Hou & Siqi Zhang & Min Zhang, 2017. "Fuzzy Control Model and Simulation for Nonlinear Supply Chain System with Lead Times," Complexity, Hindawi, vol. 2017, pages 1-11, September.
    12. Asif Iqbal Malik & Biswajit Sarkar, 2019. "Coordinating Supply-Chain Management under Stochastic Fuzzy Environment and Lead-Time Reduction," Mathematics, MDPI, vol. 7(5), pages 1-28, May.
    13. Castellano, Davide & Glock, Christoph H., 2024. "Economic production quantity for a decaying item with stochastic demand and positive lead time," International Journal of Production Economics, Elsevier, vol. 267(C).
    14. Li, Xiang, 2020. "Reducing channel costs by investing in smart supply chain technologies," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 137(C).
    15. Zhai, Yue & Choi, Tsan-Ming & Shao, Saijun & Xu, Su Xiu & Huang, George Q., 2020. "Spatial-temporal hedging coordination in prefabricated housing production," International Journal of Production Economics, Elsevier, vol. 229(C).
    16. 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.
    17. K. F. Mary Latha & R. Uthayakumar, 2017. "A two-echelon supply chain coordination with quantity discount incentive for fixed lifetime product in a fuzzy environment," International Journal of System Assurance Engineering and Management, Springer;The Society for Reliability, Engineering Quality and Operations Management (SREQOM),India, and Division of Operation and Maintenance, Lulea University of Technology, Sweden, vol. 8(2), pages 1194-1208, November.
    18. Almehdawe, Eman & Mantin, Benny, 2010. "Vendor managed inventory with a capacitated manufacturer and multiple retailers: Retailer versus manufacturer leadership," International Journal of Production Economics, Elsevier, vol. 128(1), pages 292-302, November.
    19. Sarkar, Biswajit & Moon, Ilkyeong, 2014. "Improved quality, setup cost reduction, and variable backorder costs in an imperfect production process," International Journal of Production Economics, Elsevier, vol. 155(C), pages 204-213.
    20. Ke Ma & Sébastien Thomassey & Xianyi Zeng, 2020. "Development of a central order processing system for optimizing demand-driven textile supply chains: a real case based simulation study," Annals of Operations Research, Springer, vol. 291(1), pages 627-656, August.

    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:transe:v:63:y:2014:i:c:p:44-58. 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/wps/find/journaldescription.cws_home/600244/description#description .

    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.