ABSTRACT
The majority of the models presented in this text examine production and inventory decisions to be made by a single firm. Suppliers were implicitly represented in those models through some production or purchase cost and perhaps some pricing schedule (e.g., quantity discount) as well as a description of some delivery process (e.g., lead time). Customers were implicitly modeled primarily through some description of demand. Of course in a supply chain, there are multiple firms making production, inventory, or other resource allocation decisions such as those modeled in this text. In this chapter, we turn our attention to explicitly consider this interaction and see how firms can better coordinate operations with their supply partners. Our experience is that there are two main (often related) areas where one can find opportunities to improve coordination: information sharing and incentive alignment. Furthermore, poor coordination can occur externally-among trading partners in the same supply chain-or internally-across organizational boundaries within the same firm.
