Supply chain decentralized

H. Wang, M. Guo, and J. Efstathiou, A Game-Theoretical Cooperative Mechanism Design for a Two-Echelon Decentralized Supply Chain, European Journal Operational Research, 157(2), 372-388. 

F. Bernstein and A. Federgruen, Decentralized Supply Chains with Competing Retailers under Demand Uncertainty, Management Science (2001). 

W. E. Walsh and M. P. Wellman, Decentralized Supply Chain Fonnation A Market Protocol and Competitive Equilibrium Analysis, Journal of Artificial Intelligence Research, 19, 513-567 (2003). 

Consider the supply chain example discussed earlier, but for this decentralized supply chain decision-making environment. Using the numerical example from the earlier section, the manufacturers optimal service level is - = 0.643. Using the probabilities in Table 5.1, this... 

The results discussed in this section surest the need to adjust the type of auction to extract the benefit of supplier competition as well as compensate for the decentralized supply chain. 

Forthe purpose of illustration, we considerthe same decentralized supply chain as the one in the previous sections. The terms oftrade between the two agents are specified by a simple WP contract. For simplicity, we assume the demand follows a uniform distribution on [0, z]. If the supply chain is centralized and both agents adopt the EPM objective, it can be verified that the Pareto-optimal order quantity is given by F ((r-c)/(r-v))= r-c)zl r-v) and the maximal expected profit is given by ... 

Bernstein, F. and A. Federgruen. 2001a. Decentralized supply chains with competing retailers under Demand Uncertainty. Forthcoming in Management Science. 

Chen, F. 1999. Decentralized Supply Chains Subject to Information Delays. Management Science 45(8), 1076-1090. 

Deshpande, V. and L.B. Schwarz, Optimal Capacity Allocation In Decentralized Supply Chains, Working Paper, Krannert School, Purdue University, 2002. 

Lee HL, Billington C (1993) Material management in decentralized supply chains. Oper Res... 

Qu T, Huang GQ, Zhang Y, Dai QY (2010) A generic analytical target cascading optimization system for decentralized supply chain configuration over supply chain grid. Int J Prod Econ 127 262-277... 

The profit maximization objective has a tendency toward a centralized supply chain network by selecting 13 out of 20 suppliers in order to minimize the total cost. The supply chain profit is 13,248,680, representing the ideal profit value, and the supply density is 1.34. On the other hand, the density maximization objective has a tendency toward a decentralized supply chain network by selecting all 20 suppliers. The supply chain profit is 12,055,457, and the supply density value is 96.63, representing the ideal density value. More suppliers are selected when decision maker gives higher priority to the density objective, as shown in Table 3. 

In a typical supply chain, decisions at each stage are based on information received from its immediate suppliers and customers (decentralized information). Thus, each stage makes locally optimal decisions. In such a system, customer order information can become distorted, becoming lumpy as it moves upstream. This is also known as the BuUwhip effect. As mentioned earlier, Lee et al. (1997) mathematically established the bullwhip effect in a decentralized supply chain with no information sharing. 

Raj, T. S., Lakshminarayanan, S. (2008a). Multiobjective optimization in multiechelon decentralized supply chains. Industrial and Engineering Chemistry Research, 47, 6661-6671. 

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