Non-cooperative consignment stock strategies for management in supply chain

This paper analyzes the coordination and competition issue in a two-level supply chain, having one vendor (or manufacturer) and one buyer (or retailer). A continuous deterministic model is presented. To satisfy the buyer's demands, the product is delivered in discrete batches from the vendor's stock to the buyer's stock and all shipments are realized instantaneously. We describe inventory patterns and the cost structure of production–distribution cycles (PDC) under generalized consignment stock (CS) policies. For the joint optimization case, the average total cost of production, shipment and stockholding is minimized. Optimal solution techniques are presented and illustrated with numerical examples.

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