Collaborative Procurement and Due Date Management in Supply Chains

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In this thesis we analyze the procurement process of buyers and
supply decisions of manufacturers. Companies are looking for ways
to decrease their procurement costs, which account for a large
percentage of the supply chain costs. We study the effects of
demand aggregation and collaborative procurement on buyers'
profitability. First, we make a high-level analysis and consider a
market with multiple buyers and suppliers where multi-unit
transactions for multiple items take place. The procurement costs
are effected by economies of scale in the suppliers' production
costs and by economies of scope in transportation. We design buyer
strategies that model different collaboration levels and assess
the role of collaboration under varying market conditions. Next,
we analyze the procurement process on a lower level and identify
benefits of inter-firm collaboration among buyers who are
potential competitors in the end market. We adopt a game-theoretic
approach to explore the economics of the basic mechanism
underlying collaborative procurement, and determine the conditions
that makes it beneficial to the participants.

Besides low procurement costs, important considerations in
supplier selection are responsiveness and the reliability of the
suppliers in meeting demand. Hence, manufacturers face the
pressure for quoting short and reliable lead-times. We cover
several aspects of the manufacturer's problem, such as quoting
reliable due-dates based on the workload status in the system,
maximizing profit considering the lateness cost incurred due to
late deliveries, and deciding on the level of inventory to
increase responsiveness. We employ a model where demand arrival
and manufacturing processes are stochastic, and obtain insights on
the optimal due-date policy and on the optimal inventory level.


  • Workflow Status: Published
  • Created By: Barbara Christopher
  • Created: 10/08/2010
  • Modified By: Fletcher Moore
  • Modified: 10/07/2016


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