Proceedings of the Korean Operations and Management Science Society Conference (한국경영과학회:학술대회논문집)
- 2006.05a
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- Pages.187-192
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- 2006
Application of Coordination Policies for Fuzzy Newsvendor Model
- Ryu Kwang-Yeol (Manufacturing Process Research Division, KITECH) ;
- Choi Hon-Zong (Manufacturing Process Research Division, KITECH) ;
- Lee Seok-Woo (Manufacturing Process Research Division, KITECH) ;
- Jung Moo-Young (Intelligent Systems and Management Lab., POSTECH) ;
- Cha Young-Pil (Intelligent Systems and Management Lab., POSTECH)
- Published : 2006.05.01
Abstract
In the absence of a clear command and control structure, a key challenge in supply chain management is the coordination and alignment of the supply chain members who pursue divergent and often conflicting goals. The newsvendor model is typically used as a framework to quantify the cost of misalignment and to assess the impact of coordination initiatives. This paper considers a fuzzy approach for the newsvendor problem which includes a single manufacturer and a single retailer. We use several fuzzy parameters in the model such as the demand, the wholesale price, and the market sales price. We apply a coordination policy, referred to as buyback, to solve the fuzzy newsvendor problem. Based on the buyback policy, the optimal order quantity of the retailer can be computed, and the possible profits of the members in the supply chain can be calculated with minimum sharing of private information. Focusing on the fuzzy model with buyback policy for the newsvendor problem, we illustrate exemplary fuzzy models. We also illustrate an integration model, which extends a single-manufacturer-single-retailer model to the single-manufacturer-multiple-retailer setting. In the extended model, we consider three coordination policies including quantity discount, profit sharing, and buyback, as well as non-coordination case.