Analyzing just-in-time purchasing strategy in supply chains using an evolutionary game approach

Many researchers have focused on the comparison between the JIT model and the EOQ model. However, few of them studied this problem from an evolutionary perspective. In this paper, a JIT purchasing with the single-setup-multi-delivery model is introduced to compare the total costs of the JIT model and the EOQ model. Also, we extend the classical JIT-EOQ models to a two-echelon supply chain which consists of one manufacturer and one supplier. Considering the bounded rationality of players and the quickly changing market, an evolutionary game model is proposed to discuss how these factors impact the strategy selection of the companies. And the evolutionarily stable strategy of the proposed model is analyzed. Based on the analysis, we derive the conditions when the supply chain system will choose the JIT strategy and propose a contract method to ensure that the system converges to the JIT strategy. Several numerical experiments are provided to observe the JIT and EOQ purchasing strategy selection of the manufacturer and the supplier. The results suggest that, in most situations, the JIT strategy is preferred. However, the EOQ strategy remains competitive when the supplier's inventory cost level is high or the demand is low. Supply chain members can choose the EOQ strategy even when the JIT strategy is more profitable. In some situations, strategy selection also depends on the market situation. The JIT policy with low investment costs and high supply chain performance is preferred for the companies.