Title :
Impacts of Minimum Order Quantity on a Quick Response Supply Chain
Author :
Pui-Sze Chow ; Tsan-Ming Choi ; Cheng, T.C.E.
Author_Institution :
Fac. of Appl. Sci. & Textiles, Hong Kong Polytech. Univ., Kowloon, China
fDate :
7/1/2012 12:00:00 AM
Abstract :
In this paper, we study the impacts of imposing a minimum order quantity (MOQ) on a two-echelon supply chain implementing quick response (QR) and consider the issue of coordination for such a system. By exploring the QR-MOQ supply chain system, we analytically prove that the retailer´s expected profit (REP) is nonincreasing in the MOQ. We further find that the MOQ that maximizes the manufacturer´s expected profit can significantly reduce the REP and the supply chain´s efficiency. Understanding that the static nature of the preagreed MOQ hinders the information updating capability brought about by QR, which, in turn, decreases the supply chain´s efficiency, we propose an innovative dynamic MOQ policy and derive the analytical conditions under which channel coordination with Pareto improvement is achieved.
Keywords :
Pareto distribution; innovation management; order processing; profitability; retailing; supply chain management; Pareto improvement; QR-MOQ supply chain system; REP; analytical conditions; channel coordination; information updating capability; innovative dynamic MOQ policy; manufacturer expected profit; minimum order quantity; quick response supply chain; retailer expected profit; supply chain efficiency; two-echelon supply chain; Analytical models; Bayesian methods; Contracts; Erbium; Numerical models; Supply chains; Uncertainty; Coordination; minimum order quantity (MOQ); quick response (QR);
Journal_Title :
Systems, Man and Cybernetics, Part A: Systems and Humans, IEEE Transactions on
DOI :
10.1109/TSMCA.2012.2183351