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ASME Press Select Proceedings

International Conference on Mechanical and Electrical Technology, 3rd, (ICMET-China 2011), Volumes 1–3

By
Yi Xie
Yi Xie
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ISBN:
9780791859810
No. of Pages:
906
Publisher:
ASME Press
Publication date:
2011

In this paper a mechanism to coordinate a 2-echelon decartelized supply chain with a buyer and a manufacturer is proposed. Proposed mechanism increases buyer`s order size and compensates his/her increase in cost through a credit option contract. In fact credit option contract suggests an optimum order size and a credit time to buyer. Considering these contract parameters, the buyer decides on cooperating in the coordination mechanism. We extended Existing models, by coordinating an Inventory system in which the buyer`s unsatisfied demand is fulfilled in the next period. Model has been tested on wide range of data. In all test problems (∼400 problems) our new model achieved coordination. This means that, yearly net profit of both Buyer and vendor increases after implementing proposed coordination mechanism. According to the results, we tried to answer the question:∥ how Inventory system`s parameters affect the members' profit increase after coordination?

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