Coordination in Retailer-Dominant Two-Stage Supply Chain Based on Lead-Time Reduction

This paper seeks to optimize the cost for retailer and supplier in a retailer dominant two-stage supply chain. For this study, the market demand is deterministic and the lead time is controllable, while shortage is allowed with partial backorder and partial sales loss considered. The model analyzes the way to maintain a high degree of customer satisfaction, and to reduce the total cost of the supply chain. The simulation by Maple software illustrates the relationship among the decision variables and how to optimize the cost of the retailer and supplier under different lead-time, backorder ratio and compensation coefficient.