Article ID: | iaor20119806 |
Volume: | 216 |
Issue: | 3 |
Start Page Number: | 573 |
End Page Number: | 583 |
Publication Date: | Feb 2012 |
Journal: | European Journal of Operational Research |
Authors: | Slikker Marco, zen Ulas, Soic Greys |
Keywords: | distribution, demand, simulation: applications, supply & supply chains |
We first focus on cooperation among the retailers – the retailers coordinate their initial orders and can reallocate their orders in the warehouse after they receive more information about their demand and update their demand forecasts. We study two types of cooperation: forecast sharing and joint forecasting. By using an example, we illustrate how forecast sharing collaboration might worsen performance, and asymmetric forecasting capabilities of the retailers might harm the cooperation. However, this does not happen if the retailers possess symmetric forecasting capabilities or they cooperate by joint forecasting, and the associated cooperative games have non‐empty cores. Finally, we analyze the impact that cooperation and non‐cooperation of the retailers has on the manufacturer’s profit. We focus on coordination of the entire supply chain through a three‐parameter buyback contract. We show that our three‐parameter contract can coordinate the system if the retailers have symmetric margins. Moreover, under such a contract the manufacturer benefits from retailers’ cooperation since he can get a share of improved performance. In this paper, we study inventory pooling coalitions within a decentralized distribution system consisting of a manufacturer, a warehouse (or an integration center), and