COORDINATION OF PRODUCTION-DISTRIBUTION IN SUPPLY CHAIN CONSIDERING TRANSPORTATION PRICE DISCOUNT

Some products such as mineral products need special distribution systems for transportation to the customers. The signicant establishment costs of such distribution systems leads manufacturing plants outsource their transportations to a distributor that has the required capabilities. In such distribution network, the plants deci- sions such as production planning and inventory management and also good performance of the distributor in utilization of its equipment are related to distribution decisions. For example in decentralized manner, if distributor wasn't able to send transportation vehicles to a producer on time as a result of the fact that they have been allocated to other producers, such producers may revise his decision of using some distributor schedule and therefore seeks an alternative distributor in desirable time that by the way doesn't incure the additional cost of holding inventory or delay costs. However if this problem is considered in an integrated way, it results in improvement of overall performance of producers and distributor as the members of a supply chain. Nevertheless as expected, integration doesn't lead to improvement of each member's income than decentralized manner. Therefore a coordination mechanism is needed to ensure that the protability of all members exceeds by integration. In this article, the integration of a supply chain consisting of multiple producers and a main distributor is studied and a coordination mechanism based on discount on transportation costs is proposed that as shown by results, improves the performance of the producers and distributor by providing sucient incentive for integrating them. The allocation of the surplus prot as a result of integration is dependent on the bargaining power of the distributor and producers but in this article a mechanism based on marginal contribution of the members in making the surplus is proposed that can be used as guidance to allocation of surplus among the supply chain members.