Skip Navigation



IMA Journal of Management Mathematics Advance Access published online on November 13, 2008
IMA Journal of Management Mathematics, doi:10.1093/imaman/dpn035
This Article
Right arrow FREE Full Text (PDF) Freely available
Right arrow All Versions of this Article:
20/4/395    most recent
dpn035v1
Right arrow Alert me when this article is cited
Right arrow Alert me if a correction is posted
Services
Right arrow Email this article to a friend
Right arrow Similar articles in this journal
Right arrow Alert me to new issues of the journal
Right arrow Add to My Personal Archive
Right arrow Download to citation manager
Right arrowRequest Permissions
Google Scholar
Right arrow Articles by Kogan, K.
Right arrow Articles by Hovav, S.
Right arrow Search for Related Content
Social Bookmarking
Add to CiteULike   Add to Connotea   Add to Del.icio.us  
What's this?

© The authors 2008. Published by Oxford University Press on behalf of the Institute of Mathematics and its Applications. All rights reserved.

Equilibrium replenishment in a supply chain with a single distributor and multiple retailers

Konstantin Kogan{dagger} and Yael Perlman

Department of Interdisciplinary Studies, Bar-Ilan University, Ramat-Gan, Israel

Sharon Hovav

Clalit Health Insurance, Department of Management, Tel-Aviv, Israel

{dagger} Email: kogank{at}mail.biu.ac.il

Received on 1 May 2007. Accepted on 1 November 2007.

This paper addresses a problem encountered by a large-scale health service supply chain operating in a periodic review mode. Due to the vital nature of the products it provides, the number and timing of urgent orders are not limited. As a result, increasingly high transportation costs are incurred and the problem is to select an inventory replenishment (review) period that minimizes the transportation cost. Moreover, the supply chain involves multiple retailers which inevitably and independently respond to any change in replenishment policy since it may affect their inventory costs. Such a relationship results in a game between a distribution centre and retailers. Since the problem is intractable due to its scale and stochastic nature, we combine a game theoretic approach with an empirical analysis. We show that this system is predictable using equilibria and that the current replenishment equilibrium of the health service supply chain is close to the Nash solution. Numerical analysis shows that the transportation costs are cut if the distribution centre implements in reality its formal (Stackelberg) leadership by reducing the replenishment period. However, this does not coordinate the supply chain and greater system-wide savings are possible by increasing the replenishment period if the supply chain is vertically integrated or the parties cooperate.

Keywords: inventory replenishment; supply chain management; gaming


Add to CiteULike CiteULike   Add to Connotea Connotea   Add to Del.icio.us Del.icio.us    What's this?




Disclaimer: Please note that abstracts for content published before 1996 were created through digital scanning and may therefore not exactly replicate the text of the original print issues. All efforts have been made to ensure accuracy, but the Publisher will not be held responsible for any remaining inaccuracies. If you require any further clarification, please contact our Customer Services Department.