Lower bounds for multi-echelon stochastic inventory systems
Management Science
Decentralized Multi-Echelon Supply Chains: Incentives and Information
Management Science
Competitive and Cooperative Inventory Policies in a Two-Stage Supply Chain
Management Science
Decentralized Supply Chains Subject to Information Delays
Management Science
Responsibility Tokens in Supply Chain Management
Manufacturing & Service Operations Management
Capacity Games in Assembly Systems with Uncertain Demand
Manufacturing & Service Operations Management
Competition, Cooperation, and Information Sharing in a Two-Echelon Assembly System
Manufacturing & Service Operations Management
Coalition Stability in Assembly Models
Operations Research
Supplier Competition in Decentralized Assembly Systems with Price-Sensitive and Uncertain Demand
Manufacturing & Service Operations Management
Alliance Formation Among Perfectly Complementary Suppliers in a Price-Sensitive Assembly System
Manufacturing & Service Operations Management
Competition and Cooperation in a Two-Stage Supply Chain with Demand Forecasts
Operations Research
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We consider a system in which a single finished good is assembled from two components. Demand for the finished product is stochastic and stationary, and procurement and assembly lead times are constant. Unsatisfied demand is backordered. The inventory of each component or assembly is controlled by a separate firm using a base-stock policy. Each firm is charged holding costs on its own inventory, plus a share of the shortage cost due to backorders of the finished product. We investigate the equilibrium base-stock levels that arise in this system under both echelon and local base-stock policies. In both cases, the component firms base-stock levels are economic complements. We then examine the effect on system performance when one firm uses information about other firms pipeline inventory. We find that, under echelon base-stock policies, all firms benefit with the use of pipeline information. In contrast, under local policies, using pipeline information may actually increase costs for some firms (including the firm that makes direct use of the information). Also, we compare the behavior of the decentralized system with that of the assembly system under centralized control. Finally, we describe a payment scheme between the final assembler and the suppliers that allows the decentralized system to achieve the centralized solution.