Inter-temporal inventory competition and the effects of capacity constraints

Konstantin Kogan, Charles Tapiero

Research output: Contribution to journalArticle

Abstract

This paper addresses an intertemporal inventory competition between a supplier (a provider, manufacturer) and a retailer engaged in a supply chain. The papers focus is on the effect of capacity constraints on both parties when demands are seasonal. The paper provides a comparative study of two solution approaches, one is based on supply chain competition and the other is based on system wide optimization. Our results demonstrate that with dynamic inventory competition, the retailer reduces inventory costs by reducing the response period to higher demands while increasing the supply requests compared to the system-wide optimal approach. As a result, the suppliers inventory costs increase. An example illustrating these particular facets of the problem and its application is presented and discussed in light of the supplier and the retailer coordinating policies.

Original languageEnglish (US)
Pages (from-to)682-688
Number of pages7
JournalInternational Journal of Production Economics
Volume131
Issue number2
DOIs
StatePublished - Jun 2011

Keywords

  • Inventory management
  • Supply chains

ASJC Scopus subject areas

  • Business, Management and Accounting(all)
  • Economics and Econometrics
  • Management Science and Operations Research
  • Industrial and Manufacturing Engineering

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