Supply chains fixed type

Periodic-review settings We discuss supply chains that work in a periodic-review fashion. In other words, inventories are monitored at the beginning of each fixed time interval (a period). This assumption has no significant limitation in practice, as the length of a period selected for the control policy can vary arbitrarily. Usually, the type of inventory that we will be interested in is the so-called inventory position - i.e., the inventory that was ordered but not yet received at the member s location ( outstanding orders ), plus the inventory on hand at the location, minus any accumulated backlogs. We assume fiill backlogging. 

Supply chain contracts can be of three types cost-plus, fixed price, and incentive-contract (Bolton and Dewatripoint 2004). Many procurement contracts are in fact a combination of the three, specifying incentives on some aspects and fixed-price on others. The contracting environment determines how contracts should be combined. While a contract is a convenient way of moderating partner behavior, it is of little value without a mechanism for monitoring conformance. 

Procurement contracts in a contemporary supply chain, as discussed in Chap. 4, can be of three types cost-plus, fixed price, and incentive (Bolton and Dewatripont 2004). 

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