Joint quantity flexibility under market information update

Oskay, Mine Gülden
In this study, we consider a decentralized supply chain consisting of a single retailer and a single manufacturer who manufacture two products in a given single period. The retailer commits to purchase an aggregate order quantity for the products at the beginning of the period before information on the market condition is revealed. Accordingly, the manufacturer then determines its initial production quantities for the products. Once market condition is revealed the retailer allocates its initial order to individual products and the manufacturer has to fulfill retailer’s orders fully, through expedited production if necessary. In this setting, we analyze the expected profits of both parties and compare them with two different benchmark settings where all decisions have to be given before information on market condition is available. Through a detailed computational analysis, we aim to assess the effects of the flexibility of allocating orders after information update on the profitability of the retailer and the manufacturer.
Citation Formats
M. G. Oskay, “Joint quantity flexibility under market information update,” M.S. - Master of Science, Middle East Technical University, 2013.