Journal of Production Economics http://scopuseu.com/scopus/index.php/jpe Journal of Production Economics Open European Academy of Public Sciences OEAPS Inc.&Elsevier en-US Journal of Production Economics 0925-5273 Who should invest in cost reduction in supply chains? http://scopuseu.com/scopus/index.php/jpe/article/view/706 <p>We have observed four modes of&nbsp;cost&nbsp;reduction in supply chains from practice. In particular, considering a supply chain with one manufacturer and one retailer, we identify four modes: the manufacturer solely invests, the retailer solely invests, or both firms collaboratively or independently invest to reduce the manufacturer's&nbsp;production cost. A question that arises naturally is which one is preferred by the manufacturer, the retailer, and the chain. With iso-elastic demand being sensitive to retail&nbsp;price&nbsp;and sales effort, we define&nbsp;channel powers&nbsp;(in addition to cost factors) for both firms to characterize the firms'&nbsp;investments&nbsp;and identify the best mode. We show that both firms are better off by investing collaboratively rather than independently if and only if the two firms have comparable channel powers and comparable cost factors. Moreover, a firm prefers to invest by itself solely rather than invest by its partner or both firms collaboratively if and only if its cost factor is sufficiently smaller than its partner's. We apply our results to supplier development and get some new insights. As a&nbsp;byproduct, the retailer may get less from the chain profit, which contradicts the retailer-dominant property in the literature under consignment&nbsp;contracts&nbsp;with revenue sharing. Finally, we show that our results are robust to different contract forms and whether the two firms have symmetric or&nbsp;asymmetric&nbsp;impacts on cost reduction.</p> Jing Hu, Qiying Hu, Yusen Xia ##submission.copyrightStatement## 2019-06-20 2019-06-20 207 1 18 Investigating structure of a two-echelon closed-loop supply chain using social work donation as a Corporate Social Responsibility practice http://scopuseu.com/scopus/index.php/jpe/article/view/707 <p>Besides profit, which might be the objective of any business, firms have recently shown more interests toward demonstrating&nbsp;Corporate Social Responsibility&nbsp;(CSR). As many firms are practicing CSR, they are increasingly realizing the benefits of adopting CSR as one of their main operations. Inspired by the increasing CSR practices of business firms, this study takes a practical step in implementation of a CSR activity. It develops a socially responsible&nbsp;closed-loop&nbsp;supply chain (CLSC) model that takes into account donation, as a CSR activity, and recycling of the used products for&nbsp;environmental sustainability. Considering the effects of selling&nbsp;priceand social work donation (SWD) on demand, it develops optimal&nbsp;closed form solutions&nbsp;for three decentralized and a centralized&nbsp;channel structures. A comparative analyses is presented to find the best socially responsible environmental friendly decentralized channel structure. Furthermore, the channel&nbsp;coordination problem&nbsp;between the manufacturer and the retailer is investigated using two part&nbsp;tariff&nbsp;contract. The numerical analysis showed that among the three decentralized models, the model in which the retailer promotes and collects the used products from customers generates the best channel performance.</p> Nikunja Mohan Modak, Nima Kazem, Leopoldo Eduardo Cárdenas-Barrón ##submission.copyrightStatement## 2019-06-20 2019-06-20 207 19 33 An economic decision model for selective assembly http://scopuseu.com/scopus/index.php/jpe/article/view/708 <p>In case of assemblies requiring a close fit, strict tolerances must be specified resulting in high&nbsp;manufacturing costs. In such cases, selective assembly may be adopted as a cheaper alternative to traditional interchangeable parts assembly. In selective assembly wider tolerances can be specified, thus reducing processing&nbsp;cost, and manufactured parts are sorted into groups by dimensions so that only parts from matching groups are assembled. The choice between selective and traditional assembly, however, requires comparing the cost of the two options, but literature is lacking as far as selective assembly cost models are concerned. In this paper a managerial&nbsp;economic model&nbsp;is developed to quickly compare cost of traditional and selective assembly in order to identify the lower cost option. The model includes machining and materials cost, including scrapped parts, as well as gauging/sorting cost and work in process holding cost. A&nbsp;sensitivity analysis&nbsp;as well as a numerical case study exemplifies model application also showing trade-offs between the relevant parameters.</p> Antonio C. Caputo, Girolamo Di Salvo ##submission.copyrightStatement## 2019-06-20 2019-06-20 207 56 69