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Paper Information

Journal:   SCIENTIA IRANICA   2014 , Volume 21 , Number 3 (TRANSACTIONS E: INDUSTRIAL ENGINEERING); Page(s) 988 To 1006.
 
Paper: 

NETWORK DESIGN OF A DECENTRALIZED DISTRIBUTION SUPPLY CHAIN: ANALYSIS OF NON-COOPERATIVE EQUILIBRIUM VS. COORDINATION WITH DISCOUNT OR BUYBACK MECHANISM

 
 
Author(s):  HAFEZALKOTOB A.*, MAKUI A.
 
* DEPARTMENT OF INDUSTRIAL ENGINEERING, ISLAMIC AZAD UNIVERSITY, SOUTH TEHRAN BRANCH, TEHRAN, IRAN
 
Abstract: 

This paper develops a model for illustrating how a manufacturer can use his initiative to organize retailers when they make decisions as independent actors. The candidate retailers are able to distribute products over geographically dispersed markets with stochastic demands. Each manufacturer's decision about selecting a set of retailers results in a unique distribution network design. Taking transportation and inventory costs into account, each candidate retailer determines order quantity to satisfy market demand, while the manufacturer speci es the wholesale price, pursuing uniform or retailer-speci c pricing policies, depending on trade legislation. In this single period problem and under mild assumptions on demand distribution, we show that a non-cooperative equilibrium exists for each distribution network design. We also propose distinctive coordination mechanisms corresponding to pricing policies. Using these mechanisms in each design of the distribution network, the pro ts of the manufacturer and retailer are better compared to those in non-cooperative situations. Lastly, numerical examples presented in this paper, comprised of the sensitivity analysis of some key parameters, seek to compare the results of dierent distribution network designs under various pricing policies, yielding some applicable managerial insights.

 
Keyword(s): DISTRIBUTION NETWORK DESIGN, GAME THEORY, MULTI-LOCATION NEWSVENDORS, SUPPLY CHAIN COORDINATION, BUY BACK CONTRACT
 
References: 
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