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Trust-based coordination mechanism in a divergent supply Chain

Pezeshki, Y ; Sharif University of Technology | 2012

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  1. Type of Document: Article
  2. Publisher: Institute of Industrial Engineers , 2012
  3. Abstract:
  4. We consider coordination by contract in a divergent supply chain including one manufacturer and several retailers which produces fashion products with short sale seasons. The retailers cooperate with the manufacturer as sales agents; i.e., they work in the framework of revenue sharing contracts. Because of their proximity to the market, retailers can provide more accurate demand forecast for the manufacturer when he wants to decide on his capacity building (expansion), product assignment decision and market prices with regard to retailers stiff due date, different lead times and different price-dependent demand functions. To ensure abundant supply and increase their sales, the retailers have an incentive to exaggerate their private forecast information. In this study, we propose a new coordination mechanism which incorporates trust into the coordination of key decisions using simple and prevalent contracts instead of significantly complex and unfamiliar contracts. The optimization model as a building block of this mechanism is specially considered and comprehensively analyzed to find effective methods and approximations to simplify it and to solve it using CPLEX 12.3 solver. Results show that the optimization model can be formulated as a Mixed-integer quadratic programming model and can be solved by CPLEX solver
  5. Keywords:
  6. Contract ; Supply chain ; Commerce ; Contracts ; Exhibitions ; Functions ; Manufacture ; Mathematical models ; Operations research ; Sales ; Supply chains ; Capacity building ; Coordination ; Coordination mechanisms ; Forecast information ; Mixed integer quadratic programming ; Optimization modeling ; Revenue sharing contracts ; Trust ; Coordination reactions
  7. Source: 62nd IIE Annual Conference and Expo 2012, 19 May 2012 through 23 May 2012 ; May , 2012 , Pages 3268-3277