A framework for evaluation of supply chain coordination by contracts under O2O environment

Abstract

Over the past decade, a significant change has occurred in the way businesses progress, and that change is largely due to rapidly changing technology. The entire world depends on the online network that has radically changed our perspective of how business should be managed. The faster a company adapts, the more quickly that company can outpace its competitors, and a new approach that is attracting attention is called Online to Offline (O2O).This paper establishes a comparison based on O2O approach; our model considers two types of demand under three coordination mechanisms (revenue-sharing, buy-back, and quantity flexibility contracts). We demonstrate that the best outcome and the highest profit is achieved with the O2O deterministic demand under the quantity flexibility agreement. However, the stochastic demand case attains the same result. This paper presents a fruitful introduction to this emerging topic, and future research might compare several coordination mechanisms using the Stackelberg game theory.