Browse > Article

A Long-term Capacity Reservation Contract  

Kim Yong Chan (한양대학교 산업공학과)
Kim Jong Soo (한양대학교 산업공학과)
Kang Woo Seok (한양대학교 산업공학과)
Publication Information
Journal of the Korean Operations Research and Management Science Society / v.30, no.2, 2005 , pp. 105-115 More about this Journal
Abstract
By committing to a long-term replenishment contract, buyers can purchase a product at a lower price from a supplier who is less pressured to find new customers due to the long-term contract and can charge a discounted price. We develop an analytical model from the buyer's perspective to investigate a capacity reservation contract. We are considering the system with a single supplier and a buyer. The buyer can purchases any desired amount from a spot market at a higher price in addition to the contracted amount. For such a system, we propose an algorithm to derive the optimal contract terms. The result of computational experiments shows that the algorithm finds the global optimum solution in a resonable amount of time.
Keywords
Capacity Reservation; Long-Term Contract; (R,S) Policy; Spot Market;
Citations & Related Records
연도 인용수 순위
  • Reference
1 Barnes-schuster, D., Y. Bassok and R. Anupindi, 'Coordination and Flexibility in Supply Contracts with Options,' Manufacturing and Service Operation Management, Vol.4(2002), pp.171-207   DOI
2 Bassok, Y. and R. Anupindi, 'Analysis of Supply Contract with Total Minimum Commitment,' IIE Transactions, Vol.29(1997), pp. 373-381
3 Jin, M. and S.D. Wu, 'Modeling Capacity Reservation in High Tech Manufacturing,' Department of Industrial and Systems Engineering, P. C. Rossin College of Engineering, Lehigh University, 2001
4 Perry, M., A.S. Sohal and P. Rumpf, 'Quick Response Supply Chain Alliances in the Australian Textiles, Clothing and Footwear Industry,' International Journal of Production Economics, Vol.62(1999), pp.119-132   DOI   ScienceOn
5 Seifert, R.W., U.W. Thonemann and W.H. Hausman, 'Optimal Procurement Strategies for Online Spot Markets,' European Journal of Operational Research, Vol.152(2004), pp.781-799   DOI   ScienceOn
6 Serel, D.A., A. Dada and H. Moskowitz, 'Sourcing Decision with Capacity Reservation Contract,' European Journal of Operational Research, Vol.131(2001), pp.635-648   DOI   ScienceOn
7 Tsay, A.A., 'Supply Chain Control with Quantity Flexibility,' Ph.D. dissertation, Graduate School of Business, Stanford University, Stanford, CA, 1995
8 Iyer, A.V. and M.E. Bergen, 'Quick Response in Manufacturer-Retailer Channels,' Management Science, Vol.43(1997), pp.559-570   DOI   ScienceOn
9 Brown, A.O. and H.L. Lee, 'Optimal Pay to Delay Capacity Reservation with Application to the Semiconductor Industry,' Working Paper, University of Stanford, 1997
10 Lariviere, M.A., 'Supply Chain Contracting and Coordination with Stochastic Demand,' pp.233-268, Chapter 8 in Tayur, S., Ganeshan, R, and Magazine, M. (Editors), Quantitative Models for Supply Chain Management, Kluwer Academic Publishers, 1998
11 Silver, EA, D.F. Pyke and R. Peterson, Inventory Management and Production Planning and Scheduling, 3rd Edition, John Wiley & Sons Inc, New York, 1998
12 Kim, Y.C. and J.S. Kim, 'A Long-term Replenishment Contract under (R,S) Policy,' Journal of the Korean Institute of Industrial Engineers, Vol.30(2004), pp.241-249
13 Tsay, A.A and W.S. Lovejoy, 'Quantity Flexibility Contracts and Supply Chain Performance,' Manufacturing & Service Operation Management, Vol. 1(1999), pp.89-111   DOI
14 Eppen, G.D. and A.V. Iyer, 'Backup Agreements in Fashion Buying-the Value of Upstream Flexibility,' Management Science, Vol.43(1997), pp.1469-1484   DOI   ScienceOn
15 Chen, F.Y. and D. Krass, 'Analysis of Supply Contracts with Minimum Total Order Quantity Commitments and Non-stationary Demands,' European Journal of Operational Research, Vol.131(2001), pp.309-323   DOI   ScienceOn
16 Cachon, G.P., 'Supply Chain Coordination with Contracts,' The Wharton School of Business, University of Pennsylvania, Philadelphia, PA, 2002
17 Hazra, J., B. Mahadevan and S. Seshadri, 'Modeling Capacity Reservation Contract,' 6th National Conference of the Society of Operations Management, Kozhikode, India, 2002
18 Tsay, A.A., 'The Quantity Flexibility Contract and Supplier-Customer Incentives,' Management Science, Vol.45(1999), pp. 1339-1358   DOI   ScienceOn
19 Kim, J.S., KY. Shin and S.E. Ahn, 'A Multiple Replenishment Contract with ARIMA Demand Processes,' Journal of the Operational Research Society, Vol.54(2003), pp. 1189-1197   DOI   ScienceOn