A coordinating contract for transshipment in a two-company supply chain
A coordinating contract for transshipment in a two-company supply chain
We study a supply chain with two independent companies producing an identical product and cooperating through transshipment. Previous studies of this chain show that only under certain conditions, linear transshipment prices could be found that induce the companies to choose the first best production quantities. Moreover, even if such transshipment prices do exist, they result in a unique division of total expected profit and thus they cannot accommodate arbitrary divisions of the profit. Using the Generalized Nash Bargaining Solution, we derive coordinating transshipment prices that always give rise to a coordinating contract for the chain. This contract relies on an implicit pricing mechanism.
232-237
Hezarkhani, B.
ae3fc227-94dc-47bd-b52c-2fdf90277bef
Kubiak, W.
7020eb70-23e1-49f5-bc49-f743837523b4
13 January 2011
Hezarkhani, B.
ae3fc227-94dc-47bd-b52c-2fdf90277bef
Kubiak, W.
7020eb70-23e1-49f5-bc49-f743837523b4
Hezarkhani, B. and Kubiak, W.
(2011)
A coordinating contract for transshipment in a two-company supply chain.
European Journal of Operational Research, .
(doi:10.1016/j.ejor.2010.04.030).
Abstract
We study a supply chain with two independent companies producing an identical product and cooperating through transshipment. Previous studies of this chain show that only under certain conditions, linear transshipment prices could be found that induce the companies to choose the first best production quantities. Moreover, even if such transshipment prices do exist, they result in a unique division of total expected profit and thus they cannot accommodate arbitrary divisions of the profit. Using the Generalized Nash Bargaining Solution, we derive coordinating transshipment prices that always give rise to a coordinating contract for the chain. This contract relies on an implicit pricing mechanism.
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Accepted/In Press date: 27 April 2010
Published date: 13 January 2011
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Local EPrints ID: 479330
URI: http://eprints.soton.ac.uk/id/eprint/479330
ISSN: 0377-2217
PURE UUID: f810c0b5-c548-41d8-821f-14ecbc0280e1
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Date deposited: 20 Jul 2023 17:27
Last modified: 17 Mar 2024 04:21
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Author:
B. Hezarkhani
Author:
W. Kubiak
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