Article ID: | iaor20021058 |
Country: | United Kingdom |
Volume: | 52 |
Issue: | 7 |
Start Page Number: | 830 |
End Page Number: | 838 |
Publication Date: | Jul 2001 |
Journal: | Journal of the Operational Research Society |
Authors: | Fransoo J.C., Wouters M.J.F., Kok T.G. de |
Keywords: | supply |
Supply chain planning concepts from multi-echelon inventory theory are generally based on some form of centralised planning of supply chains. Those multi-echelon models that do consider decentralised planning assume complete information and/or a specific single objective function. This paper investigates how multi-echelon inventory theory can accommodate a setting with decentralised decision makers (a supplier and a number of retail groups) without complete information. We present a coordination procedure that does not require the retail groups to exchange demand information, but does allow using opportunities for demand pooling between them. We illustrate our ideas by way of a quantitative analysis of a two-echelon divergent supply chain, with both cooperative and non-cooperative retail groups. We conclude that coordination across a supply chain with decentralised control and limited centralised information is feasible by using available algorithms with satisfactory service level and cost performance.