Modelling and comparison of three echelon production-inventory supply chain models for a deteriorating product with and without backlogging
TL;DR: In this article, the authors consider a production inventory problem of a deteriorating product that begins to deteriorate immediately on production and develop two models of three echelon supply chain whose rate of demand, production and deterioration are assumed to be constant.
Abstract: We consider a production inventory problem of a deteriorating product that begins to deteriorate immediately on production. Two models of three echelon supply chain are developed whose rate of demand, production and deterioration are assumed to be constant. The second model allows backlogging of the demand, while the first model does not allow backlogging. In both models, the producer's cycle starts with zero stock and the production continues till the stock level reaches an optimal value. There will be demand and deterioration and consequently stock level falls to zero during the non-production phase. The demand subsequently received is backordered in the second model and a fraction of it is met by restarting the production process. Optimal lot sizes of distributor and retailer is identified within each of the producer's cycle. A numerical example is illustrated. Comparison between the models shows that backordering reduces the total supply chain cost.
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TL;DR: In this paper, the authors investigated the behavioral operations effect in production inventory decision of supply chain consisting of one manufacturer and one buyer, and analyzed how the unfairness concerns impact the decision of production inventory in a supply chain system.
Abstract:
Purpose
The purpose of this paper is to investigate the behavioral operations effect in production inventory decision of supply chain consisting of one manufacturer and one buyer, and analyze how the unfairness concerns impact the decision of production inventory in a supply chain system.
Design/methodology/approach
First, a model without the buyer’s unfairness concern is established; then, advantage unfairness concern and disadvantage unfairness concern behavior of buyer are taken into account in the production inventory system. The authors analyze how advantage unfairness concern and disadvantage unfairness concern impact the optimal decisions and channel coordination.
Findings
The result shows several important conclusions. First, the buyer’s optimal ordering quantity and expected utility show opposing trend when the buyer has advantage unfairness concern. Second, the stronger bargaining power of the manufacturer results in an increasing buyer’s optimal ordering quantity under the advantage unfairness concern case, but decreasing under the disadvantage unfairness concern case. Third, the supply chain production-inventory can be coordinated under advantage unfairness concern case, but cannot be coordinated under disadvantage unfairness concern.
Practical implications
The study can provide to practitioners with important implications that when the vendor or the buyer in supply chain wants to make the decision of inventory replenishment, taking unfairness concerns into account will lead to different results. Therefore, to effectively improve the operations performance of supply chain, partners of the supply chain should not only care about their own interest, but also need to consider the fairness concern of the other partner, reflecting the cooperation consciousness of supply chain management.
Originality/value
This paper contributes to the new field of creative management–behavioral operations, offering managerial implications for the decision and optimization of supply chain production-inventory problem.
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