• Proceedings of the Society of Korea Industrial and System Engineering Conference
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• 2002.05a
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• pp.343-348
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• 2002

We are concerned with a long-term replenishment contract for the ARIMA demand process in a supply chain. The chain is composed of one supplier, one buyer and consumers for a product. The replenishment contract is based upon the well-known (s, Q) policy but allows us to contract future replenishments at a time with a price discount. Due to the larger forecast error of future demand, the buyer should keep a higher level of safety stock to provide the same level of service as the usual (s, Q) policy. However, the buyer can reduce his purchase cost by ordering a larger quantity at a discounted price. Hence, there exists a trade-off between the price discount and the inventory holding cost. For the ARIMA demand process, we present a model for the contract and an algorithm to find the number of the future replenishments. Numerical experiments show that the proposed algorithm is efficient and accurate.

• Journal of the Korean Operations Research and Management Science Society
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• v.37 no.2
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• pp.45-56
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• 2012

This paper considers a supply chain consisting of a component manufacturer and a product manufacturer. The component manufacturer provides components for the product manufacturer based on a vendor-managed inventory type of supply contract, and also faces demands from the market with the option of to accept or reject each incoming demand. Using the Markov decision process model, we examine the structure of the optimal production control and inventory rationing policy. Two types of heuristics are presented. One is the fixed-buffer policy and the other uses two linear functions. We implement a computational study and present managerial insights based on the observations.

• Management Science and Financial Engineering
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• v.15 no.1
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• pp.1-31
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• 2009

This paper considers the value of warehousing contract under probabilistic demands. We consider a supply chain consisting of a supplier, a retailer and its third-party warehousing partner who provides the warehousing service to the retailer through an outsourcing contract. A typical contract is specified by initial space commitment and modification schedule. The retailer decides the order quantity for the supplier and space commitment for the outsourcing contract. Since there is close relationship between order quantity and space commitment to minimize the total cost including ordering cost, inventory carrying cost, shortage cost, and warehousing cost, we develop an analytical model under probabilistic demands, where the retailer can determine the optimal order size and space commitment level jointly. We found the closed-form optimum for a single-period case and the optimal conditions for a two-period case. To evaluate the value of contract flexibility for the two-period case, we compared the total cost under two policies; one with modification, under which the base commitment can be changed at the start of each period and the other without modification. From results of our numerical analysis, we showed that the modification policy is more cost-effective as the variability of demand increases.

• Journal of Korean Institute of Industrial Engineers
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• v.27 no.4
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• pp.345-351
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• 2001

We are concerned with a multiple replenishment contract with a purchase price discount in a supply chain. The chain is composed of one supplier, one buyer and consumers for a product. The replenishment contract is based upon the well-known (s, Q) policy but allows contracting several firmed orders at a time with a price discount. Due to a larger forecast error of the future demand, the buyer should keep a higher level of safety stock to provide the same level of service of the usual (s, Q) policy but can reduce his purchase cost by placing larger quantity. Thus there exists a trade-off between the price discount and inventory holding cost. We present a model for the contract and an algorithm to find the optimum number of the firmed orders. Computer experiments show that the algorithm finds the global optimum solution very fast.

• Journal of the military operations research society of Korea
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• v.34 no.2
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• pp.27-42
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• 2008

This study simulated the effect of the quantity flexibility contract(QFC) on the Korean military inventory system. The results shows that the QFC make the inventory system more efficient. For validity of this study, we assume the basic four demand patterns (increase, decrease, high variation and long seasonality) which are the exogenous variables of these simulation systems. We measured the difference of the traditional military inventory system's and new QFC system's performances. Under the all demand patterns, QFC models have little inventory than the traditional systems. We suggest, therefore, the military change the supply contract into QFC for decrease inventory and expect the results of this study applied to the company level.

• Journal of Korean Society of Industrial and Systems Engineering
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• v.34 no.2
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• pp.68-75
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• 2011

The purpose of this paper is to suggest a supplier and buyer's pricing decision strategy model with discount-policy over a long-term replenishment contract in a supply chain environment by small and medium size manufacturing company. We assume that the buyer has a superior economic power over a supplier and each agent in a supply chain is unaware of each other. The supplier proposes pricing decision strategy to induce the buyer to choose the terms of contract for the benefit of the supplier. Then buyer decides the terms of contract to maximize her profit considering supplier's discount-policy. We also present a numerical example to illustrate the efficiency of pricing decision strategy.

• Journal of the Korean Operations Research and Management Science Society
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• v.41 no.2
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• pp.101-127
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• 2016

Irrational ordering decisions of supply chain members have been gaining growing importance in the area of supply chain management. Irrational ordering behaviors that deviate from the profit maximizing decisions in the newsvendor settings have observed with human experiments in recent research. These behaviors can be modeled with several typical decision bias elements. This bias in ordering decisions affects the performance of supply chain contracts designed based on the assumption that the supply chain members make optimal decisions, making it necessary to design supply chain contracts by considering the irrationality. The purpose of this research is to derive a method to design the revenue sharing contract that considers human irrationality in ordering decisions. This research considers a simple two-echelon supply chain consisting of one supplier and one retailer, where the supplier is assumed to be perfectly rational while the retailer making newsvendor type ordering decisions displays irrational ordering behaviors. Under this environment, this research analytically models the revenue sharing contract to maximize the total supply chain profit or the supplier's own profits while considering the three decision bias patterns of the retailer, which include the pull-to-center effect, the prospect theory, and the increased subjective sensitivity to the revenue sharing ratio. Irrationality parameters are measured through human experiments based on which and through numerical simulations, we showed that significant improvements in the supply chain performance can be achieved.

• Proceedings of the Korean DIstribution Association Conference
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• 2000.10a
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• pp.47-59
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• 2000

Following the increasing importance of logistics function in today's company operation, this work explores the mechanism for cooperation within a supply chain, especially between a firm and an independent logistics supplier. We first characterize the optimal linear logistics contract based upon the recent developments in contract theory, and then investigate the effect of such a contract on the firm's inventory policy. The results indicate that the order quantity becomes smaller and the lead time becomes shorter and under the optimal contract than without the incentive scheme. Accordingly, the service level under the optimal contract becomes higher. These findings are in accordance with the literature on vertical control and JIT (Just in Time) philosophy.

• The Korean Journal of Air & Space Law and Policy
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• v.31 no.2
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• pp.37-72
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• 2016

In the aerospace field, besides special purpose airplanes, contracts for supply of various types of products such as prototypes, unmanned aerial vehicles and space launch vehicles are increasing. In the case of the contractor, it was planned to spend a large amount of money to supply the production, but if the purchase specification that presents the quality and performance standard of the product is poor or lacks the capacity to judge the performance, consuming enormous amounts of time and money. Even if the undertaker does not have the ability to supply the products with the required performance and quality to achieve the purpose of the contract, he/she must pay the cost of burial due to the incompleteness of the work and the compensation for the cancellation of the contract. In this case, the defendant ordered the plaintiff to supply the aircraft by the Happy Box method, which is capable of ILS Offset flight as specified in the Purchase Specification, but the plaintiff attempted to supply the aircraft by the RNAV method. Although the ILS ground signal can be inspected by the RNAV method, the aircraft manufactured in the manner claimed by the plaintiff does not have the ILS Offset flight function required by the purchase specification, so the defendant can not achieve the purpose required by the purchase specification. It was a question of whether a defendant's cancellation of contract was legitimate. The aircraft, which is the object of this contract, is a subordinate substitute, so the case contract is of undertaking. Therefore, in order to complete the work in this contract, the major structural parts of the aircraft must be manufactured as agreed and have the performance generally required in the social sense. However, the aircraft delivered by the plaintiff has serious defects because the defendant can not achieve the purpose required by the purchase specification due to the lack of the ILS Offset flight function required by the purchase specification. This deficiency is impossible for the plaintiff to repair, so the defendant 's cancellation of the contract is legitimate.

• 한국디지털정책학회:학술대회논문집
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• 2005.11a
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• pp.231-242
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• 2005

The purpose of this study is to generate a proper regulation improvement direction of the public IT project contract law through the current four contract methods and three methods of the awarding party of a contract method. The research method for this paper is derived from the written materials of the present public IT project contract law. Two problems have been processed in order to produce the results: the current contract methods and the awarding party of a contract method. The current contract methods consist of a competition contract, a private contract, and a supply methodology contract. The methods of the awarding party of a contract display a qualified evaluation regulation, the 2nd step competition bid, a standard cost separation tender, and a contract by a negotiation. The results exhibit that the general competition contract consists of four improvement items. The contract by a negotiation contains five improvement items. The group private contract has one improvement item. And the private contract includes one improvement item. These results implicate that the current public IT project contract law demands better improvement work for the ubiquitous Korea.