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Comparing different coordination scenarios in a three-level supply chain system

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  • Siraj K. Zahran
  • Mohamad Y. Jaber
  • Simone Zanoni

Abstract

The consignment stock (CS) policy, independently or coupled with vendor managed inventory (VMI), has been practised by businesses and shown to be profitable. It helps to reduce or eliminate out-of-stock instances caused by fluctuations in demand. CS brings several benefits to collaborating parties. Unlike the two-level supply chain models in the literature, this paper considers a three-level supply chain that consists of a supplier, a vendor and a buyer with CS policy agreements. The paper also examines four coordination scenarios (a combination of traditional and CS) in conjunction with a payment scheme between adjacent parties. Nine coordination cases (models) are provided. A sensitivity analysis is performed to study the effects of some parameters on the performance of the developed models. Most of the results showed that a combination of traditional and CS policies returned a higher total system profit.

Suggested Citation

  • Siraj K. Zahran & Mohamad Y. Jaber & Simone Zanoni, 2017. "Comparing different coordination scenarios in a three-level supply chain system," International Journal of Production Research, Taylor & Francis Journals, vol. 55(14), pages 4068-4088, July.
    • Handle: RePEc:taf:tprsxx:v:55:y:2017:i:14:p:4068-4088
    DOI: 10.1080/00207543.2016.1249431
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    References listed on IDEAS

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    1. Sarker, Bhaba R., 2014. "Consignment stocking policy models for supply chain systems: A critical review and comparative perspectives," International Journal of Production Economics, Elsevier, vol. 155(C), pages 52-67.
    2. Chen, Jen-Ming & Lin, I-Chen & Cheng, Hung-Liang, 2010. "Channel coordination under consignment and vendor-managed inventory in a distribution system," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 46(6), pages 831-843, November.
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    4. Mohamad Y. Jaber & Simone Zanoni & Lucio E. Zavanella, 2014. "'Consignment stock' for a two-level supply chain with entropy cost," European Journal of Industrial Engineering, Inderscience Enterprises Ltd, vol. 8(2), pages 244-272.
    5. Gümüs, Mehmet & Jewkes, Elizabeth M. & Bookbinder, James H., 2008. "Impact of consignment inventory and vendor-managed inventory for a two-party supply chain," International Journal of Production Economics, Elsevier, vol. 113(2), pages 502-517, June.
    6. Braglia, Marcello & Castellano, Davide & Frosolini, Marco, 2014. "Safety stock management in single vendor–single buyer problem under VMI with consignment stock agreement," International Journal of Production Economics, Elsevier, vol. 154(C), pages 16-31.
    7. Zanoni, Simone & Jaber, Mohamad Y. & Zavanella, Lucio E., 2012. "Vendor managed inventory (VMI) with consignment considering learning and forgetting effects," International Journal of Production Economics, Elsevier, vol. 140(2), pages 721-730.
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