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Title: A surcharge pricing scheme for supply chain coordination under JIT environment
Authors: Chakraborty, Abhishek
Chatterjee, Ashis Kumar
Keywords: Information asymmetry
Supply chain coordination
Supply chain management
Surcharge pricing
Issue Date: 2016
Publisher: SCOPUS
European Journal of Operational Research
Elsevier B.V.
Series/Report no.: 253(1)
Abstract: Just-In-Time (JIT) system involves frequent shipments of smaller batch sizes from the supplier to the buyer. For the buyer, it results in the reduction of the inventory holding cost. However, it is often accompanied by an increase in the set up cost for the supplier. Thus, the supplier may be reluctant to switch to the JIT mode unless he is assured of some form of compensation. In this paper, we introduce a pricing scheme where the buyer offers the supplier an increase in the wholesale price, to encourage the supplier to switch to the JIT mode. Such a pricing scheme may be termed as a surcharge. We develop the economics of surcharge pricing as a supply chain coordinating mechanism under JIT environment. We also establish the equivalence of surcharge pricing with other common coordination mechanisms like Quantity Discount (QD) and Joint Economic Lot Sizing (JELS) model. � 2016 Elsevier B.V. All rights reserved.
Description: Chakraborty, Abhishek, XLRI Xavier School of Management, Jamshedpur, Jharkhand 831001, India; Chatterjee, Ashis Kumar, Indian Institute of Management Calcutta, Diamond Harbour Road, Kolkata, West Bengal 700104, India
ISSN/ISBN - 03772217
DOI - 10.1016/j.ejor.2016.02.001
Appears in Collections:Operations Management

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