A theoretical game approach for two- echelon stochastic inventory system

Alaei, S ; Sharif University of Technology | 2015

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  1. Type of Document: Article
  2. Publisher: Budapest Tech Polytechnical Institution , 2015
  3. Abstract:
  4. In this paper, we study the differences between the Centralized and Decentralized approaches in a two-echelon stochastic inventory system under the lost sale policy. We formulate the condition in which the retailer applies (r, Q) inventory policy, and his relation with the upper echelon who acts as a manufacturer. This situation has not been considered in the literature before. The Centralized approach results in optimal solution of the system and the Decentralized one is based on Stackelberg game in which the manufacturer is the leader. The demand arrives according to the stationary Poisson process. We drive the long-run average cost functions, then a set of computational steps are developed to obtain the solutions. Furthermore, we provide a numerical study to compare the two approaches. Here are some conclusions: (a) the Decentralized approach reduces the system’s cost efficiency; (b) moreover, the Decentralized approach raises the lead time, the order quantity, and the supply chain inventory relative to the Centralized approach
  5. Keywords:
  6. Continuous review policy ; Inventory management ; Stackelberg game ; Two-echelon inventory system
  7. Source: Acta Polytechnica Hungarica ; Volume 12, Issue 4 , 2015 , Pages 221-239 ; 17858860 (ISSN)
  8. URL: http://www.uni-obuda.hu/journal/Alaei_Hajji_Alaei_Behravesh_60.pdf