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Quantity discount coordination for allocation of purchase orders in supply chains with multiple suppliers

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  • Yeu-Shiang Huang
  • Rong-Shuan Ho
  • Chih-Chiang Fang

Abstract

Studies about supply chain coordination have emphasised maximising the profit of the overall supply chain, but the profit changes of individual members in the supply chain have often been overlooked. It has been shown that profit increment of the whole supply chain may not be beneficial for every individual member. Therefore, the use of quantity discounts to achieve the coordination of a supply chain is discussed in this article. A two-echelon selling system with a single buyer and multiple suppliers is considered to enhance profitability for both sides at the same time. An acceptable quantity discount condition for both the buyer and the suppliers to determine an appropriate order quantity allocation to produce more profits in the supply chain is proposed. Furthermore, the profit distribution between the buyer and each supplier is studied. Finally, the results of the numerical application show that the buyer should focus on managing the procurement costs to decrease the acquiring costs, and the suppliers should focus on the fixed costs of management to reduce the production costs in machine operations.

Suggested Citation

  • Yeu-Shiang Huang & Rong-Shuan Ho & Chih-Chiang Fang, 2015. "Quantity discount coordination for allocation of purchase orders in supply chains with multiple suppliers," International Journal of Production Research, Taylor & Francis Journals, vol. 53(22), pages 6653-6671, November.
  • Handle: RePEc:taf:tprsxx:v:53:y:2015:i:22:p:6653-6671
    DOI: 10.1080/00207543.2015.1055345
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    Cited by:

    1. Ho-Jin Cha & So-Won Choi & Eul-Bum Lee & Duk-Man Lee, 2023. "Knowledge Retrieval Model Based on a Graph Database for Semantic Search in Equipment Purchase Order Specifications for Steel Plants," Sustainability, MDPI, vol. 15(7), pages 1-37, April.
    2. Ilkyeong Moon & Yoon Jea Jeong & Subrata Saha, 2020. "Investment and coordination decisions in a supply chain of fresh agricultural products," Operational Research, Springer, vol. 20(4), pages 2307-2331, December.
    3. Shuangsheng Wu & Qi Li, 2021. "Emergency Quantity Discount Contract with Suppliers Risk Aversion under Stochastic Price," Mathematics, MDPI, vol. 9(15), pages 1-12, July.
    4. Ghoudi, Kilani & Hamdouch, Younes & Boulaksil, Youssef & Hamdan, Sadeque, 2024. "Supply chain coordination in a dual sourcing system under the Tailored Base-Surge policy," European Journal of Operational Research, Elsevier, vol. 317(2), pages 533-549.

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