Coordinating the assembly system based on compensation mechanism under supply disruption

Guo Li*, Bingzong Peng, Tao Gao, Zhaohua Wang

*Corresponding author for this work

    Research output: Contribution to journalArticlepeer-review

    1 Citation (Scopus)

    Abstract

    A well-coordinated assembly system plays an important role in an enterprise's strategic management. As the uncertainty of the supply chain is increasing, coordinating the assembly system effectively under supply disruption becomes a critical success factor for a global supply chain system. In this study, we consider an assembly system with two suppliers and one manufacturer and formulate the model of each partner with bonus policy under supply disruption. The optimal decision of each partner is analyzed under decentralized decision. Then we optimize the total cost of assembly system under centralized decision which is regarded as the benchmark. Furthermore, to achieve this benchmark, the compensation mechanism is designed to coordinate the assembly system under supply disruption. At last, the sensitivity is analyzed and the numerical analysis shows that our compensation mechanism is reasonable and effective.

    Original languageEnglish
    Pages (from-to)2364-2370
    Number of pages7
    JournalInformation Technology Journal
    Volume10
    Issue number12
    DOIs
    Publication statusPublished - 2011

    Keywords

    • Assembly system
    • Bonus policy
    • Compensation mechanism
    • Supply disruption

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