Coordination in the Decentralized Assembly System with Dual Supply Modes | Zendy

Xu Guan | Zendy; Mengqi Liu | Zendy

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Coordination in the Decentralized Assembly System with Dual Supply Modes

Author(s) -

Xu Guan,

Mengqi Liu

Publication year - 2013

Publication title -

discrete dynamics in nature and society

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 0.264

H-Index - 39

eISSN - 1607-887X

pISSN - 1026-0226

DOI - 10.1155/2013/381987

Subject(s) - supply chain , procurement , production (economics) , computer science , mode (computer interface) , payment , nash equilibrium , dual (grammatical number) , decentralised system , order (exchange) , sensitivity (control systems) , decentralization , industrial organization , business , mathematical optimization , microeconomics , economics , control (management) , mathematics , marketing , art , literature , finance , electronic engineering , world wide web , engineering , operating system , market economy , artificial intelligence

This paper investigates a decentralized assembly system that consists of one assembler and two independent suppliers; wherein one supplier is perfectly reliable for the production, while the other generates yield uncertainty. Facing the random market demand, the assembler has to order the components from one supplier in advance and meanwhile requires the other supplier to deliver the components under VMI mode. We construct a Nash game between the supplier and the assembler so as to derive their equilibrium procurement/production strategies. The results show that the channel’s performance is highly undermined by the decentralization between players and also the combination of two supply modes. Compared to the centralized system, we propose an advance payment contract to perfectly coordinate the supply chain performance. The numerical examples indicate some management implications on the supply mode comparison and sensitivity analysis

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