Article ID: | iaor20041957 |
Country: | United Kingdom |
Volume: | 39 |
Issue: | 3 |
Start Page Number: | 193 |
End Page Number: | 208 |
Publication Date: | May 2003 |
Journal: | Transportation Research. Part E, Logistics and Transportation Review |
Authors: | Khouja Moutaz |
Keywords: | distribution, optimization |
Most supply chain models focus on two-stage chains in which vendors supply material to one customer. In this paper, we formulate a three-stage supply chain model where a firm can supply many customers. We deal with three inventory coordination mechanisms between chain members and solve a cost minimization model for each. We show that some of the coordination mechanisms can result in a significantly lower total cost than matching production and delivery along the chain. We provide some insights into when the added complexity of the second and third coordination mechanisms lead to significant cost reductions.