Coordinating Supply Chains via Advance‐Order Discounts, Minimum Order Quantities, and Delegations
To avoid inventory risks, manufacturers often place rush orders with suppliers only after they receive firm orders from their customers (retailers). Rush orders are costly to both parties because the supplier incurs higher production costs. We consider a situation where the supplier's productio...
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| Autor*in: |
Chintapalli, Prashant [verfasserIn] |
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| Format: |
Artikel |
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| Sprache: |
Englisch |
| Erschienen: |
2017 |
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| Rechteinformationen: |
Nutzungsrecht: © 2017 The Authors. published by Wiley Periodicals, Inc. on behalf of Production and Operations Management Society © COPYRIGHT 2017 Wiley Subscription Services, Inc. |
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| Schlagwörter: |
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| Übergeordnetes Werk: |
Enthalten in: Production and operations management - Hoboken, NJ : Wiley-Blackwell, 1992, 26(2017), 12, Seite 2175-2186 |
|---|---|
| Übergeordnetes Werk: |
volume:26 ; year:2017 ; number:12 ; pages:2175-2186 |
| Links: |
|---|
| DOI / URN: |
10.1111/poms.12751 |
|---|
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OLC1999519221 |
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| 520 | |a To avoid inventory risks, manufacturers often place rush orders with suppliers only after they receive firm orders from their customers (retailers). Rush orders are costly to both parties because the supplier incurs higher production costs. We consider a situation where the supplier's production cost is reduced if the manufacturer can place some of its order in advance. In addition to the rush order contract with a pre‐established price, we examine whether the supplier should offer advance‐order discounts to encourage the manufacturer to place a portion of its order in advance, even though the manufacturer incurs some inventory risk. While the advance‐order discount contract is Pareto‐improving, our analysis shows that the discount contract cannot coordinate the supply chain. However, if the supplier imposes a pre‐specified minimum order quantity requirement as a qualifier for the manufacturer to receive the advance‐order discount, then such a combined contract can coordinate the supply chain. Furthermore, the combined contract enables the supplier to attain the first‐best solution. We also explore a delegation contract that either party could propose. Under this contract, the manufacturer delegates the ordering and salvaging activities to the supplier in return for a discounted price on all units procured. We find the delegation contract coordinates the supply chain and is Pareto‐improving. We extend our analysis to a setting where the suppliers capacity is limited for advance production but unlimited for rush orders. Our structural results obtained for the one‐supplier‐one‐manufacturer case continue to hold when we have two manufacturers. | ||
| 540 | |a Nutzungsrecht: © 2017 The Authors. published by Wiley Periodicals, Inc. on behalf of Production and Operations Management Society | ||
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| 650 | 4 | |a advance‐order | |
| 650 | 4 | |a delegation | |
| 650 | 4 | |a minimum order quantity | |
| 650 | 4 | |a supply chain contracts | |
| 650 | 4 | |a Discounts | |
| 650 | 4 | |a Inventory | |
| 650 | 4 | |a Supply chains | |
| 650 | 4 | |a Suppliers | |
| 700 | 1 | |a Disney, Stephen M |4 oth | |
| 700 | 1 | |a Tang, Christopher S |4 oth | |
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10.1111/poms.12751 doi PQ20171228 (DE-627)OLC1999519221 (DE-599)GBVOLC1999519221 (PRQ)g931-26c193a74ef956d31bd784571d70590e436296d409a803095d1f20b278219bf13 (KEY)0207872420170000026001202175coordinatingsupplychainsviaadvanceorderdiscountsmi DE-627 ger DE-627 rakwb eng 330 ZDB Chintapalli, Prashant verfasserin aut Coordinating Supply Chains via Advance‐Order Discounts, Minimum Order Quantities, and Delegations 2017 Text txt rdacontent ohne Hilfsmittel zu benutzen n rdamedia Band nc rdacarrier To avoid inventory risks, manufacturers often place rush orders with suppliers only after they receive firm orders from their customers (retailers). Rush orders are costly to both parties because the supplier incurs higher production costs. We consider a situation where the supplier's production cost is reduced if the manufacturer can place some of its order in advance. In addition to the rush order contract with a pre‐established price, we examine whether the supplier should offer advance‐order discounts to encourage the manufacturer to place a portion of its order in advance, even though the manufacturer incurs some inventory risk. While the advance‐order discount contract is Pareto‐improving, our analysis shows that the discount contract cannot coordinate the supply chain. However, if the supplier imposes a pre‐specified minimum order quantity requirement as a qualifier for the manufacturer to receive the advance‐order discount, then such a combined contract can coordinate the supply chain. Furthermore, the combined contract enables the supplier to attain the first‐best solution. We also explore a delegation contract that either party could propose. Under this contract, the manufacturer delegates the ordering and salvaging activities to the supplier in return for a discounted price on all units procured. We find the delegation contract coordinates the supply chain and is Pareto‐improving. We extend our analysis to a setting where the suppliers capacity is limited for advance production but unlimited for rush orders. Our structural results obtained for the one‐supplier‐one‐manufacturer case continue to hold when we have two manufacturers. Nutzungsrecht: © 2017 The Authors. published by Wiley Periodicals, Inc. on behalf of Production and Operations Management Society © COPYRIGHT 2017 Wiley Subscription Services, Inc. advance‐order delegation minimum order quantity supply chain contracts Discounts Inventory Supply chains Suppliers Disney, Stephen M oth Tang, Christopher S oth Enthalten in Production and operations management Hoboken, NJ : Wiley-Blackwell, 1992 26(2017), 12, Seite 2175-2186 (DE-627)13106522X (DE-600)1108460-1 (DE-576)032731965 1059-1478 nnns volume:26 year:2017 number:12 pages:2175-2186 http://dx.doi.org/10.1111/poms.12751 Volltext http://onlinelibrary.wiley.com/doi/10.1111/poms.12751/abstract https://search.proquest.com/docview/1977145813 GBV_USEFLAG_A SYSFLAG_A GBV_OLC SSG-OLC-WIW GBV_ILN_26 GBV_ILN_110 GBV_ILN_673 GBV_ILN_4012 AR 26 2017 12 2175-2186 |
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10.1111/poms.12751 doi PQ20171228 (DE-627)OLC1999519221 (DE-599)GBVOLC1999519221 (PRQ)g931-26c193a74ef956d31bd784571d70590e436296d409a803095d1f20b278219bf13 (KEY)0207872420170000026001202175coordinatingsupplychainsviaadvanceorderdiscountsmi DE-627 ger DE-627 rakwb eng 330 ZDB Chintapalli, Prashant verfasserin aut Coordinating Supply Chains via Advance‐Order Discounts, Minimum Order Quantities, and Delegations 2017 Text txt rdacontent ohne Hilfsmittel zu benutzen n rdamedia Band nc rdacarrier To avoid inventory risks, manufacturers often place rush orders with suppliers only after they receive firm orders from their customers (retailers). Rush orders are costly to both parties because the supplier incurs higher production costs. We consider a situation where the supplier's production cost is reduced if the manufacturer can place some of its order in advance. In addition to the rush order contract with a pre‐established price, we examine whether the supplier should offer advance‐order discounts to encourage the manufacturer to place a portion of its order in advance, even though the manufacturer incurs some inventory risk. While the advance‐order discount contract is Pareto‐improving, our analysis shows that the discount contract cannot coordinate the supply chain. However, if the supplier imposes a pre‐specified minimum order quantity requirement as a qualifier for the manufacturer to receive the advance‐order discount, then such a combined contract can coordinate the supply chain. Furthermore, the combined contract enables the supplier to attain the first‐best solution. We also explore a delegation contract that either party could propose. Under this contract, the manufacturer delegates the ordering and salvaging activities to the supplier in return for a discounted price on all units procured. We find the delegation contract coordinates the supply chain and is Pareto‐improving. We extend our analysis to a setting where the suppliers capacity is limited for advance production but unlimited for rush orders. Our structural results obtained for the one‐supplier‐one‐manufacturer case continue to hold when we have two manufacturers. Nutzungsrecht: © 2017 The Authors. published by Wiley Periodicals, Inc. on behalf of Production and Operations Management Society © COPYRIGHT 2017 Wiley Subscription Services, Inc. advance‐order delegation minimum order quantity supply chain contracts Discounts Inventory Supply chains Suppliers Disney, Stephen M oth Tang, Christopher S oth Enthalten in Production and operations management Hoboken, NJ : Wiley-Blackwell, 1992 26(2017), 12, Seite 2175-2186 (DE-627)13106522X (DE-600)1108460-1 (DE-576)032731965 1059-1478 nnns volume:26 year:2017 number:12 pages:2175-2186 http://dx.doi.org/10.1111/poms.12751 Volltext http://onlinelibrary.wiley.com/doi/10.1111/poms.12751/abstract https://search.proquest.com/docview/1977145813 GBV_USEFLAG_A SYSFLAG_A GBV_OLC SSG-OLC-WIW GBV_ILN_26 GBV_ILN_110 GBV_ILN_673 GBV_ILN_4012 AR 26 2017 12 2175-2186 |
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10.1111/poms.12751 doi PQ20171228 (DE-627)OLC1999519221 (DE-599)GBVOLC1999519221 (PRQ)g931-26c193a74ef956d31bd784571d70590e436296d409a803095d1f20b278219bf13 (KEY)0207872420170000026001202175coordinatingsupplychainsviaadvanceorderdiscountsmi DE-627 ger DE-627 rakwb eng 330 ZDB Chintapalli, Prashant verfasserin aut Coordinating Supply Chains via Advance‐Order Discounts, Minimum Order Quantities, and Delegations 2017 Text txt rdacontent ohne Hilfsmittel zu benutzen n rdamedia Band nc rdacarrier To avoid inventory risks, manufacturers often place rush orders with suppliers only after they receive firm orders from their customers (retailers). Rush orders are costly to both parties because the supplier incurs higher production costs. We consider a situation where the supplier's production cost is reduced if the manufacturer can place some of its order in advance. In addition to the rush order contract with a pre‐established price, we examine whether the supplier should offer advance‐order discounts to encourage the manufacturer to place a portion of its order in advance, even though the manufacturer incurs some inventory risk. While the advance‐order discount contract is Pareto‐improving, our analysis shows that the discount contract cannot coordinate the supply chain. However, if the supplier imposes a pre‐specified minimum order quantity requirement as a qualifier for the manufacturer to receive the advance‐order discount, then such a combined contract can coordinate the supply chain. Furthermore, the combined contract enables the supplier to attain the first‐best solution. We also explore a delegation contract that either party could propose. Under this contract, the manufacturer delegates the ordering and salvaging activities to the supplier in return for a discounted price on all units procured. We find the delegation contract coordinates the supply chain and is Pareto‐improving. We extend our analysis to a setting where the suppliers capacity is limited for advance production but unlimited for rush orders. Our structural results obtained for the one‐supplier‐one‐manufacturer case continue to hold when we have two manufacturers. Nutzungsrecht: © 2017 The Authors. published by Wiley Periodicals, Inc. on behalf of Production and Operations Management Society © COPYRIGHT 2017 Wiley Subscription Services, Inc. advance‐order delegation minimum order quantity supply chain contracts Discounts Inventory Supply chains Suppliers Disney, Stephen M oth Tang, Christopher S oth Enthalten in Production and operations management Hoboken, NJ : Wiley-Blackwell, 1992 26(2017), 12, Seite 2175-2186 (DE-627)13106522X (DE-600)1108460-1 (DE-576)032731965 1059-1478 nnns volume:26 year:2017 number:12 pages:2175-2186 http://dx.doi.org/10.1111/poms.12751 Volltext http://onlinelibrary.wiley.com/doi/10.1111/poms.12751/abstract https://search.proquest.com/docview/1977145813 GBV_USEFLAG_A SYSFLAG_A GBV_OLC SSG-OLC-WIW GBV_ILN_26 GBV_ILN_110 GBV_ILN_673 GBV_ILN_4012 AR 26 2017 12 2175-2186 |
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10.1111/poms.12751 doi PQ20171228 (DE-627)OLC1999519221 (DE-599)GBVOLC1999519221 (PRQ)g931-26c193a74ef956d31bd784571d70590e436296d409a803095d1f20b278219bf13 (KEY)0207872420170000026001202175coordinatingsupplychainsviaadvanceorderdiscountsmi DE-627 ger DE-627 rakwb eng 330 ZDB Chintapalli, Prashant verfasserin aut Coordinating Supply Chains via Advance‐Order Discounts, Minimum Order Quantities, and Delegations 2017 Text txt rdacontent ohne Hilfsmittel zu benutzen n rdamedia Band nc rdacarrier To avoid inventory risks, manufacturers often place rush orders with suppliers only after they receive firm orders from their customers (retailers). Rush orders are costly to both parties because the supplier incurs higher production costs. We consider a situation where the supplier's production cost is reduced if the manufacturer can place some of its order in advance. In addition to the rush order contract with a pre‐established price, we examine whether the supplier should offer advance‐order discounts to encourage the manufacturer to place a portion of its order in advance, even though the manufacturer incurs some inventory risk. While the advance‐order discount contract is Pareto‐improving, our analysis shows that the discount contract cannot coordinate the supply chain. However, if the supplier imposes a pre‐specified minimum order quantity requirement as a qualifier for the manufacturer to receive the advance‐order discount, then such a combined contract can coordinate the supply chain. Furthermore, the combined contract enables the supplier to attain the first‐best solution. We also explore a delegation contract that either party could propose. Under this contract, the manufacturer delegates the ordering and salvaging activities to the supplier in return for a discounted price on all units procured. We find the delegation contract coordinates the supply chain and is Pareto‐improving. We extend our analysis to a setting where the suppliers capacity is limited for advance production but unlimited for rush orders. Our structural results obtained for the one‐supplier‐one‐manufacturer case continue to hold when we have two manufacturers. Nutzungsrecht: © 2017 The Authors. published by Wiley Periodicals, Inc. on behalf of Production and Operations Management Society © COPYRIGHT 2017 Wiley Subscription Services, Inc. advance‐order delegation minimum order quantity supply chain contracts Discounts Inventory Supply chains Suppliers Disney, Stephen M oth Tang, Christopher S oth Enthalten in Production and operations management Hoboken, NJ : Wiley-Blackwell, 1992 26(2017), 12, Seite 2175-2186 (DE-627)13106522X (DE-600)1108460-1 (DE-576)032731965 1059-1478 nnns volume:26 year:2017 number:12 pages:2175-2186 http://dx.doi.org/10.1111/poms.12751 Volltext http://onlinelibrary.wiley.com/doi/10.1111/poms.12751/abstract https://search.proquest.com/docview/1977145813 GBV_USEFLAG_A SYSFLAG_A GBV_OLC SSG-OLC-WIW GBV_ILN_26 GBV_ILN_110 GBV_ILN_673 GBV_ILN_4012 AR 26 2017 12 2175-2186 |
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10.1111/poms.12751 doi PQ20171228 (DE-627)OLC1999519221 (DE-599)GBVOLC1999519221 (PRQ)g931-26c193a74ef956d31bd784571d70590e436296d409a803095d1f20b278219bf13 (KEY)0207872420170000026001202175coordinatingsupplychainsviaadvanceorderdiscountsmi DE-627 ger DE-627 rakwb eng 330 ZDB Chintapalli, Prashant verfasserin aut Coordinating Supply Chains via Advance‐Order Discounts, Minimum Order Quantities, and Delegations 2017 Text txt rdacontent ohne Hilfsmittel zu benutzen n rdamedia Band nc rdacarrier To avoid inventory risks, manufacturers often place rush orders with suppliers only after they receive firm orders from their customers (retailers). Rush orders are costly to both parties because the supplier incurs higher production costs. We consider a situation where the supplier's production cost is reduced if the manufacturer can place some of its order in advance. In addition to the rush order contract with a pre‐established price, we examine whether the supplier should offer advance‐order discounts to encourage the manufacturer to place a portion of its order in advance, even though the manufacturer incurs some inventory risk. While the advance‐order discount contract is Pareto‐improving, our analysis shows that the discount contract cannot coordinate the supply chain. However, if the supplier imposes a pre‐specified minimum order quantity requirement as a qualifier for the manufacturer to receive the advance‐order discount, then such a combined contract can coordinate the supply chain. Furthermore, the combined contract enables the supplier to attain the first‐best solution. We also explore a delegation contract that either party could propose. Under this contract, the manufacturer delegates the ordering and salvaging activities to the supplier in return for a discounted price on all units procured. We find the delegation contract coordinates the supply chain and is Pareto‐improving. We extend our analysis to a setting where the suppliers capacity is limited for advance production but unlimited for rush orders. Our structural results obtained for the one‐supplier‐one‐manufacturer case continue to hold when we have two manufacturers. Nutzungsrecht: © 2017 The Authors. published by Wiley Periodicals, Inc. on behalf of Production and Operations Management Society © COPYRIGHT 2017 Wiley Subscription Services, Inc. advance‐order delegation minimum order quantity supply chain contracts Discounts Inventory Supply chains Suppliers Disney, Stephen M oth Tang, Christopher S oth Enthalten in Production and operations management Hoboken, NJ : Wiley-Blackwell, 1992 26(2017), 12, Seite 2175-2186 (DE-627)13106522X (DE-600)1108460-1 (DE-576)032731965 1059-1478 nnns volume:26 year:2017 number:12 pages:2175-2186 http://dx.doi.org/10.1111/poms.12751 Volltext http://onlinelibrary.wiley.com/doi/10.1111/poms.12751/abstract https://search.proquest.com/docview/1977145813 GBV_USEFLAG_A SYSFLAG_A GBV_OLC SSG-OLC-WIW GBV_ILN_26 GBV_ILN_110 GBV_ILN_673 GBV_ILN_4012 AR 26 2017 12 2175-2186 |
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Rush orders are costly to both parties because the supplier incurs higher production costs. We consider a situation where the supplier's production cost is reduced if the manufacturer can place some of its order in advance. In addition to the rush order contract with a pre‐established price, we examine whether the supplier should offer advance‐order discounts to encourage the manufacturer to place a portion of its order in advance, even though the manufacturer incurs some inventory risk. While the advance‐order discount contract is Pareto‐improving, our analysis shows that the discount contract cannot coordinate the supply chain. However, if the supplier imposes a pre‐specified minimum order quantity requirement as a qualifier for the manufacturer to receive the advance‐order discount, then such a combined contract can coordinate the supply chain. Furthermore, the combined contract enables the supplier to attain the first‐best solution. We also explore a delegation contract that either party could propose. Under this contract, the manufacturer delegates the ordering and salvaging activities to the supplier in return for a discounted price on all units procured. We find the delegation contract coordinates the supply chain and is Pareto‐improving. We extend our analysis to a setting where the suppliers capacity is limited for advance production but unlimited for rush orders. 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Coordinating Supply Chains via Advance‐Order Discounts, Minimum Order Quantities, and Delegations |
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Coordinating Supply Chains via Advance‐Order Discounts, Minimum Order Quantities, and Delegations |
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To avoid inventory risks, manufacturers often place rush orders with suppliers only after they receive firm orders from their customers (retailers). Rush orders are costly to both parties because the supplier incurs higher production costs. We consider a situation where the supplier's production cost is reduced if the manufacturer can place some of its order in advance. In addition to the rush order contract with a pre‐established price, we examine whether the supplier should offer advance‐order discounts to encourage the manufacturer to place a portion of its order in advance, even though the manufacturer incurs some inventory risk. While the advance‐order discount contract is Pareto‐improving, our analysis shows that the discount contract cannot coordinate the supply chain. However, if the supplier imposes a pre‐specified minimum order quantity requirement as a qualifier for the manufacturer to receive the advance‐order discount, then such a combined contract can coordinate the supply chain. Furthermore, the combined contract enables the supplier to attain the first‐best solution. We also explore a delegation contract that either party could propose. Under this contract, the manufacturer delegates the ordering and salvaging activities to the supplier in return for a discounted price on all units procured. We find the delegation contract coordinates the supply chain and is Pareto‐improving. We extend our analysis to a setting where the suppliers capacity is limited for advance production but unlimited for rush orders. Our structural results obtained for the one‐supplier‐one‐manufacturer case continue to hold when we have two manufacturers. |
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To avoid inventory risks, manufacturers often place rush orders with suppliers only after they receive firm orders from their customers (retailers). Rush orders are costly to both parties because the supplier incurs higher production costs. We consider a situation where the supplier's production cost is reduced if the manufacturer can place some of its order in advance. In addition to the rush order contract with a pre‐established price, we examine whether the supplier should offer advance‐order discounts to encourage the manufacturer to place a portion of its order in advance, even though the manufacturer incurs some inventory risk. While the advance‐order discount contract is Pareto‐improving, our analysis shows that the discount contract cannot coordinate the supply chain. However, if the supplier imposes a pre‐specified minimum order quantity requirement as a qualifier for the manufacturer to receive the advance‐order discount, then such a combined contract can coordinate the supply chain. Furthermore, the combined contract enables the supplier to attain the first‐best solution. We also explore a delegation contract that either party could propose. Under this contract, the manufacturer delegates the ordering and salvaging activities to the supplier in return for a discounted price on all units procured. We find the delegation contract coordinates the supply chain and is Pareto‐improving. We extend our analysis to a setting where the suppliers capacity is limited for advance production but unlimited for rush orders. Our structural results obtained for the one‐supplier‐one‐manufacturer case continue to hold when we have two manufacturers. |
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To avoid inventory risks, manufacturers often place rush orders with suppliers only after they receive firm orders from their customers (retailers). Rush orders are costly to both parties because the supplier incurs higher production costs. We consider a situation where the supplier's production cost is reduced if the manufacturer can place some of its order in advance. In addition to the rush order contract with a pre‐established price, we examine whether the supplier should offer advance‐order discounts to encourage the manufacturer to place a portion of its order in advance, even though the manufacturer incurs some inventory risk. While the advance‐order discount contract is Pareto‐improving, our analysis shows that the discount contract cannot coordinate the supply chain. However, if the supplier imposes a pre‐specified minimum order quantity requirement as a qualifier for the manufacturer to receive the advance‐order discount, then such a combined contract can coordinate the supply chain. Furthermore, the combined contract enables the supplier to attain the first‐best solution. We also explore a delegation contract that either party could propose. Under this contract, the manufacturer delegates the ordering and salvaging activities to the supplier in return for a discounted price on all units procured. We find the delegation contract coordinates the supply chain and is Pareto‐improving. We extend our analysis to a setting where the suppliers capacity is limited for advance production but unlimited for rush orders. Our structural results obtained for the one‐supplier‐one‐manufacturer case continue to hold when we have two manufacturers. |
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