Collaborative Policy of the Supply-Hub for Assemble-to-Order Systems with Delivery Uncertainty

Guo Li, Mengqi Liu, Xu Guan, Zheng Huang
2014 Discrete Dynamics in Nature and Society  
This paper considers the collaborative mechanisms of the Supply-Hub in the Assemble-to-Order system (ATO system hereafter) with upstream delivery uncertainty. We first propose a collaborative replenishment mechanism in the ATO system, and construct a replenishment model with delivery uncertainty in use of the Supply-Hub. After transforming the original model into a one-dimensional optimization problem, we derive the optimal assembly quantity and reorder point of each component. In order to
more » ... e the Supply-Hub to conduct collaborative replenishment with each supplier, the punishment and reward mechanisms are proposed. The numerical analysis illustrates that service level of the Supply-Hub is an increasing function of both punishment and reward factors. Therefore, by adjusting the two factors, suppliers' incentives of collaborative replenishment can be significantly enhanced, and then the service level of whole ATO system can be improved.
doi:10.1155/2014/625812 fatcat:b23ciu4ifnacvonbkzdhpgxbkm