ANALYSIS OF MANUFACTURING COST MISREPORTING BEHAVIOR OF MANUFACTURER UNDER CONSIGNMENT CONTRACT WITH REVENUE SHARING

Abstract

The two-echelon supply chain under stochastic manufacturing demand has a single component supplier selling to a single manufacturer.The model with perpetual manufacturing demand and many replenishment opportunities is considered by analytic method. The problem can be modeled as a supplier-led Stackelberg dynamic game.Supply chain performances under consignment and non-consignment are considered respectively.The supplier, acting as a designer of supply chain,offers the manufacturer a backorder penalty cost share allocation,and then the manufacturer decides the optimal base stock level.In this paper the following conclusions are obtained.Under consignment,there is a unique equilibrium solution in the game,and the supply chain system is optimal.Under non-consignment,there is a unique equilibrium solution in the game,and the supply chain system is optimal.Supply chain performance under consignment is superior to that under non-consignment.