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Replenishment decision and coordination contract in cluster supply chain

Bo Yan (School of Economics and Commerce, South China University of Technology, Guangzhou, China)
Xiaoxu Chen (School of Economics and Commerce, South China University of Technology, Guangzhou, China)
Yanping Liu (School of Economics and Commerce, South China University of Technology, Guangzhou, China)
Chang Xia (School of Economics and Commerce, South China University of Technology, Guangzhou, China)

Industrial Management & Data Systems

ISSN: 0263-5577

Article publication date: 30 July 2019

Issue publication date: 7 August 2019

Abstract

Purpose

The cluster supply chain is widely used in the professional towns in China, and improves the competitiveness of small and medium enterprises through integrating the supply chain with the industrial cluster. The paper aims to discuss this issue.

Design/methodology/approach

This paper studies a cluster supply chain under vendor managed inventory (VMI) system, which includes vendors, third-party logistics (TPL) enterprises and retail enterprises, and aims to study the replenishment decisions and coordination contracts in the supply chain. The economic order quantity model is applied to analyze the influence of marginal transportation cost factor under two replenishment modes – direct delivery and milk-run delivery, in order to find out the optimal replenishment decisions corresponding to different marginal transportation cost factors. And then, the revenue sharing contract is used to identify the change of profits of enterprises in the supply chain before and after the coordination contract.

Findings

It is concluded that the marginal transportation cost factor is an important factor influencing the replenishment decision especially in milk-run delivery, and the introduction of the revenue sharing contract can improve the revenue in the supply chain.

Originality/value

This is the first study that explores the relationship between a single transport cost and a single transport batch of cluster supply chain in centralized VMI & TPL system. The conclusions of the study have certain theoretical significance for the decision making and coordination of cluster supply chain.

Keywords

Acknowledgements

This work was supported by National Natural Science Foundation of China (71871098), Humanities and Social Sciences Research Planning Fund Project of the Ministry of Education (18YJA630127), Natural Science Foundation of Guangdong Province (2017A030313415), Philosophical and Social Sciences Planning Project of Guangzhou (2019GZGJ05), and Fundamental Research Funds for the Central Universities (ZDPY201914).

Citation

Yan, B., Chen, X., Liu, Y. and Xia, C. (2019), "Replenishment decision and coordination contract in cluster supply chain", Industrial Management & Data Systems, Vol. 119 No. 6, pp. 1374-1399. https://doi.org/10.1108/IMDS-02-2019-0087

Publisher

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Emerald Publishing Limited

Copyright © 2019, Emerald Publishing Limited