Journal of Systems Engineering and Electronics ›› 2011, Vol. 22 ›› Issue (2): 247-256.doi: 10.3969/j.issn.1004-4132.2011.02.010

• SYSTEMS ENGINEERING • Previous Articles     Next Articles

Collaborative supply chain planning under dynamic lot
sizing costs with capacity decision

Hongyan Li1, 2, Tianhui You1,∗, and Xiaoyi Luo1   

  1. 1. School of Business Administration, Northeastern University, Shenyang 110004, P. R. China;
    2. Aarhus School of Business, Aarhus University, Aarhus V 8210, Denmark
  • Online:2011-04-19 Published:2010-01-03


Studies show that supply chain cooperation improves
supply chain performance. However, it remains a challenge to
develop and implement the realistic supply chain cooperation
scheme. We investigate a two-echelon supply chain planning
problem with capacity acquisition decision under asymmetric cost
and demand information. A simple negotiation-based coordination
mechanism is developed to synchronize production/order strategies
of a supplier and a buyer. The coordination scheme shows
how the supplier and the buyer modify their production and order
policy in order to find a joint economic lot sizing plan, which saves
the overall supply chain cost. The allocation of the cooperation
benefit is determined by negotiation. Due to the complexity of the
multiple periods, multiple level supply chain lot sizing with capacity
decision, a heuristic algorithm is developed to find coordination
solutions. Finally, the results of the numerical study indicate the
performance of supply chain coordination scheme.