The Impact of Transportation Costs and Capacity
on Channel Coordination Decisions
Aysegul Toptal (presenter) and Sila Cetinkaya
Texas A&M Industrial Engineering
College Station, TX
The buyer-vendor coordination
problem has long been studied in the literature. However, the issue of
cargo capacities and general transportation costs has been overlooked.
In this paper, we generalize the buyer-vendor coordination problem with
stochastic demand to consider cargo capacity constraints and general inbound
and outbound transportation costs, simultaneously. In particular, we consider
the classical newsboy-setting and compute decentralized and centralized
solutions for the purpose of developing channel coordination benchmarks
and mechanisms. We present several interesting, nontraditional, and counter-intuitive
results that are of practical interest in the context of transportation-
and supply-contract design.