A study of compensation problem for uncertainty of quality in supply chain

Yasuhiko Takemoto, Ikuo Arizono

Research output: Chapter in Book/Report/Conference proceedingConference contribution

Abstract

The uncertainty of demand occurs at a downstream side and spreads over an upstream side in a supply chain. To the contrary, the uncertainty of supply occurs at an upstream side and spreads over an downstream side in a supply chain. The quality of items is particularly important as a factor in the uncertainty. Imperfect quality items included in the procurement from a supplier brings the uncertainty of supply, that is, whether imperfect quality items are included or not, or how many imperfect quality items are included. An intangible loss due to the uncertainty of imperfect quality items is unavoidable even if the downstream side (taht is, a manufacrurer or retailer) prevented all imperfect quality items from being distributed to customers and society by perfect inspection. Therefore, in this paper, we consider the impact of the uncertainty of imperfect quality items in the situation that the imperfect quality items included in the procurement from the supplier are perfectly retrieved in the downstream side. In particular, the impact of the uncertainty of imperfect quality items is evaluated as an object of a monetary compensation. Hence, we propose a condition of the monetary compensation to maintain supply chain partnarship. Through some numerical examples, the condition of the monetary compensation for the uncertanty of imperfect quality items is illustrated.

Original languageEnglish
Title of host publicationProceedings of the International MultiConference of Engineers and Computer Scientists 2018, IMECS 2018
EditorsOscar Castillo, David Dagan Feng, A.M. Korsunsky, Craig Douglas, S. I. Ao
PublisherNewswood Limited
ISBN (Electronic)9789881404886
Publication statusPublished - Jan 1 2018
Event2018 International MultiConference of Engineers and Computer Scientists, IMECS 2018 - Hong Kong, Hong Kong
Duration: Mar 14 2018Mar 16 2018

Publication series

NameLecture Notes in Engineering and Computer Science
Volume2
ISSN (Print)2078-0958

Conference

Conference2018 International MultiConference of Engineers and Computer Scientists, IMECS 2018
CountryHong Kong
CityHong Kong
Period3/14/183/16/18

ASJC Scopus subject areas

  • Computer Science (miscellaneous)

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  • Cite this

    Takemoto, Y., & Arizono, I. (2018). A study of compensation problem for uncertainty of quality in supply chain. In O. Castillo, D. D. Feng, A. M. Korsunsky, C. Douglas, & S. I. Ao (Eds.), Proceedings of the International MultiConference of Engineers and Computer Scientists 2018, IMECS 2018 (Lecture Notes in Engineering and Computer Science; Vol. 2). Newswood Limited.