×

Coordination and profit sharing between a manufacturer and a buyer with target profit under credit option. (English) Zbl 1127.90345

Summary: Several studies have focused on buyer vendor coordination through quantity discount/credit option mechanism but few quantitative models and investigations are available that have explored the mechanism for transfer of surplus generated due to coordination. In this paper, we develop a coordination mechanism through credit option such that both the parties can divide the surplus equitably after satisfying their own profit targets. Two situations are explored here; in the first situation; both the parties have no individual profit target from the business whereas in the second situation, there are individual profit target for both the parties. The proposed mechanism for division of surplus is studied through a numerical study and the impact of different parameter values on the results are examined.

MSC:

90B30 Production models
PDFBibTeX XMLCite
Full Text: DOI

References:

[1] Abad, P. L.; Jaggi, C. K., A joint approach for setting unit price and the length of the credit period for a seller when end demand is price sensitive, International Journal of Production Economics, 83, 115-122 (2003)
[2] Aggarwall, S. P.; Jaggi, C. K., Ordering policies of deteriorating items under permissible delay in payment, Journal of Operational Research Society., 46, 6, 658-662 (1995) · Zbl 0830.90032
[3] Arcelus, F. J.; Srinivasan, G., Delay of payment vs price discount for extra ordinary purchases: The buyers perspective, Engineering cost and Production Economics, 19, 1-3, 273-279 (1990)
[4] Bannerjee, A., A joint economic lot size model for purchaser and vendor, Decision Science, 17, 3, 292-311 (1986)
[5] Chang, J. H.; Hung, H. C.; Dye, Y. C., An inventory model for deteriorating items with linear trend demand under the condition of permissible delay in payments, Production Planning and Control, 12, 3, 274-282 (2001)
[6] Chu, P.; Chung, K. H., A theorem on the determination of economic order quantity under conditions of permissible delay in payments, Computer and Operations Research, 25, 1, 49-52 (1998) · Zbl 0906.90051
[7] Chu, P.; Chung, K. H.; Lan, S. P., Economic order quantity of deteriorating items under permissible delay in payments, Computer and Operations Research, 25, 10, 817-824 (1998) · Zbl 1042.90505
[8] Corbette, C. J.; Groote, X. De., A supplier’s optimal quantity discount policy under asymmetric information, Management Science, 46, 3, 444-450 (2000) · Zbl 1231.90024
[9] Dada, M.; Srikanth, K. N., Pricing policies for quantity discounts, Management Science, 33, 10, 1247-1253 (1987)
[10] Goyal, S. K., An integrated inventory model for a single supplier single customer problem, International Journal of Production Research, 15, 1, 107-111 (1977)
[11] Goyal, S. K., Economic order quantity under condition of permissible delay in payments, Journal of Operation Research Society, 36, 4, 335-338 (1985) · Zbl 0568.90025
[12] Goyal, S. K., Determination of a supplier’s economic ordering policy, Journal of the Operational Research Society, 38, 9, 853-857 (1987) · Zbl 0626.90022
[13] Goyal, S. K.; Gupta, Y. P., Integrated inventory model: The buyer vendor co-ordination, European Journal of Operational Research, 41, 3, 261-269 (1989)
[14] Hwang, H.; Shinn, S. W., Retailer’s pricing and lot sizing policy for exponentially deteriorating products under the conditions of permissible delay in payments, Computer and Operations Research, 24, 6, 539-547 (1997) · Zbl 0882.90029
[15] Issakson, A., 2002. Trade credit in Kenyan manufacturing: Evidence from plant level data. Working paper, source: <www.unido.org./userfiles/PuffK/SIN_WPS04.pdf>; Issakson, A., 2002. Trade credit in Kenyan manufacturing: Evidence from plant level data. Working paper, source: <www.unido.org./userfiles/PuffK/SIN_WPS04.pdf>
[16] Jamal, A. M.M.; Sarkar, B.; Wang, S., Optimal payment time for a retailer under permitted delay of payment to the wholesaler, International Journal of Production Economics, 66, 59-66 (2000)
[17] Khouja, Moutaz, Optimizing inventory decisions in a multistage multi customer supply chain, Transportation Research Part E, 39, 3, 193-208 (2003)
[18] Kim, S. J.; Hwang, H.; Shinn, W. S., An optimal credit policy to increase wholesaler’s profit with price dependent demand function, Production Planning and Control, 6, 1, 45-50 (1995)
[19] Lal, R.; Staelin, R., An approach for developing an optimal discount pricing policy, Management Science, 30, 12, 1524-1539 (1984)
[20] Lee, H. L.; Rosenblatt, M. J., A generalized quantity discount-pricing model to increase supplier’s profits, Management Science, 32, 9, 1177-1185 (1986) · Zbl 0605.90022
[21] Monahan, J. P., A quantity discount pricing model to increase vendor profits, Management Science, 30, 6, 720-726 (1984)
[22] Munson, L. C.; Rosenblatt, J. M., Theories and realities of quantity discounts: An exploratory study, Production and Operations Management, 7, 4, 352-369 (1998)
[23] Munson, L. C.; Rosenblatt, J. M., Coordinating a three level supply chain with quantity discounts, IIE Transactions, 33, 4, 371-384 (2001)
[24] Rosenblatt, M. J.; Lee, H. L., Improving profitability with quantity discounts under fixed demand, IIE Transaction, 17, 4, 388-395 (1985)
[25] Sarmah, S. P.; Acharya, D.; Goyal, S. K., Buyer vendor coordination models in supply chain management, European Journal of Operational Research, 175, 1, 1-15 (2006) · Zbl 1137.90359
[26] Sherafali, M.; Co, HC., Some models for understanding the cooperation between the supplier and the buyer, International Journal of Production Research, 38, 3425-3449 (2000) · Zbl 1093.90506
[27] Shinn, W. S.; Hwang, H., Optimal pricing and ordering policies for retailers under order size dependent delay in payments, Computers and Operations Research, 30, 1, 35-50 (2003) · Zbl 1029.90008
[28] Thomas, D. J.; Grifin, P. J., Coordinated supply chain management, European Journal of Operational Research, 94, 1, 1-15 (1996) · Zbl 0929.90004
[29] Tsay, A.; Nahmias, S.; Agarwal, N., Modeling supply chain contracts: A review, (Tayur, S.; Magazine, M.; Ganeshan, R., Quantitative Models for Supply Chain Management (1999), Kluwer Academic Publishers: Kluwer Academic Publishers 1999), 301-336 · Zbl 1052.90513
[30] Weng, Z. K., Channel coordination and quantity discounts, Management Science, 41, 9, 1509-1522 (1995) · Zbl 0861.90067
[31] Weng, Z. K., Modeling quantity discounts under general price sensitive demand functions: Optimal policies and relationship, European Journal of Operational Research, 86, 2, 300-314 (1995) · Zbl 0906.90102
[32] Weng, Z. K., The power of coordination decisions for short life cycles products in a manufacturing and distribution supply chain, IIE Transactions, 31, 1047-1049 (1999)
[33] Wilson, N., Wetherhill, P., Summers, B., 2000. Business to Business credit: A strategic tool for the ‘New Economy’. Source: <http://cmrc.vsp.co.uk>; Wilson, N., Wetherhill, P., Summers, B., 2000. Business to Business credit: A strategic tool for the ‘New Economy’. Source: <http://cmrc.vsp.co.uk>
[34] Woo, Y. Y.; Hsu, S. L.; Wu, S., An integrated inventory model for a single vendor and multiple buyers with ordering cost reduction, International Journal of Production Economics, 73, 3, 203-221 (2001)
This reference list is based on information provided by the publisher or from digital mathematics libraries. Its items are heuristically matched to zbMATH identifiers and may contain data conversion errors. In some cases that data have been complemented/enhanced by data from zbMATH Open. This attempts to reflect the references listed in the original paper as accurately as possible without claiming completeness or a perfect matching.