Benefits of retailer-supplier partnership initiatives under time-varying demand: a comparative analytical study

Devendra Choudhary, Ravi Shankar*, Prasanta K. Dey, Harish Chaudhary, Lakshman S. Thakur

*Corresponding author for this work

Research output: Contribution to journalArticle

Abstract

This paper aims to help supply chain managers to determine the value of retailer-supplier partnership initiatives beyond information sharing (IS) according to their specific business environment under time-varying demand conditions. For this purpose, we use integer linear programming models to quantify the benefits that can be accrued by a retailer, a supplier and system as a whole from shift in inventory ownership and shift in decision-making power with that of IS. The results of a detailed numerical study pertaining to static time horizon reveal that the shift in inventory ownership provides system-wide cost benefits in specific settings. Particularly, when it induces the retailer to order larger quantities and the supplier also prefers such orders due to significantly high setup and shipment costs. We observe that the relative benefits of shift in decision-making power are always higher than the shift in inventory ownership under all the conditions. The value of the shift in decision-making power is greater than IS particularly when the variability of underlying demand is low and time-dependent variation in production cost is high. However, when the shipment cost is negligible and order issuing efficiency of the supplier is low, the cost benefits of shift in decision-making power beyond IS are not significant.

Original languageEnglish
Pages (from-to)4279-4298
Number of pages20
JournalInternational Journal of Production Research
Volume52
Issue number14
Early online date5 Feb 2014
DOIs
Publication statusPublished - 2014

Bibliographical note

This is an Author's Accepted Manuscript of an article published in 1. Choudhary, D., Shankar, R., Dey, P. K., Chaudhary, H., & Thakur, L. S. (2014). Benefits of retailer-supplier partnership initiatives under time-varying demand: a comparative analytical study. International journal of production research, Before print. International journal of production research 2014 © Taylor & Francis, available online at: http://www.tandfonline.com/10.1080/00207543.2013.879615

Keywords

  • consignment inventory
  • information sharing
  • lot-sizing
  • retailer-supplier partnership
  • vendor-managed inventory

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