A NEW COOPERATIVE SCENARIO FOR SUPPLY CHAINS USING COMMON REPLENISHMENT EPOCHS

Abstract

In this paper, we propose a new cooperative scenario for supply chains using common replenishment epochs based on the mathematical model presented in Viswanathan and Piplani's [25] paper. In order to solve an optimal solution for the cooperative scenario, we first conduct a theoretical analysis on the optimal cost function of the mathematical model. Then, we propose an efficient search algorithm by utilizing our theoretical results on the cooperative scenario. Also, we introduce a saving-sharing mechanism that could motivate the buyers to cooperate with the vendor. Importantly, the proposed saving-sharing mechanism assists the supply chain system to create a multi-win situation among the vendor and the buyers. Using the 48 sets of data in Viswanathan and Piplani's [25] paper, we demonstrate that the proposed cooperative scenario could attain significant improvement on the costs for both the vendor and the buyers in comparison to the Stackelberg-game scenario.