Research on Economic Procurement Models on the Basis of Controllable Lead Time

Xiaoping Fang, Xianyun Li, Li He

Abstract


On the basis of extremum principle, a mathematical model of two-echelon supply chain for both the suppliers and the purchasers is established. The model is built to analyze the decentralized and centralized procurement decision-making under the condition of controllable lead time and the joint undertaking of costs. By using the numerical analysis and operating the two models, the difference of the amount of economic procurement and the lead time under different manner of decision-making and costs undertaking are discussed. The results show that the amount of costs reduction is associated with the compensation costs paid by suppliers for further cutting down the lead time. Therefore, cutting down the lead time to a certain extent would reduce the overall costs of supply chain.

Full Text: PDF DOI: 10.5539/ijbm.v4n10p103

Creative Commons License
This work is licensed under a Creative Commons Attribution 3.0 License.

International Journal of Business and Management   ISSN 1833-3850 (Print)   ISSN 1833-8119 (Online)

Copyright © Canadian Center of Science and Education

To make sure that you can receive messages from us, please add the 'ccsenet.org' domain to your e-mail 'safe list'. If you do not receive e-mail in your 'inbox', check your 'bulk mail' or 'junk mail' folders.