Supply chain coordination with downstream operating costs: Coordination and investment to improve downstream operating efficiency

Supply chain coordination with downstream operating costs: Coordination and investment to improve downstream operating efficiency

0.00 Avg rating0 Votes
Article ID: iaor2006104
Country: Netherlands
Volume: 162
Issue: 3
Start Page Number: 762
End Page Number: 772
Publication Date: May 2005
Journal: European Journal of Operational Research
Authors: ,
Keywords: investment
Abstract:

We endow the downstream firm in a supply chain with operating costs in addition to the traditional overage and underage costs. We reanalyze Lariviere and Porteus's “Selling to a Newsvendor” model, allowing for non-linear production costs, and provide comparative statics. We then explore investment in reducing downstream operating costs. To overcome the fact that investment is lower in a decentralized chain than in an integrated one, we propose several coordination mechanisms – buybacks, revenue sharing and operating subsidy with a license fee.

Reviews

Required fields are marked *. Your email address will not be published.