Coordination of Supply Chain with a Dominant Retailer under Demand Disruptions

Jian Li,Jun Wu,Xiaofang Liu,Fengmei Yang

doi:10.1155/2014/854681

Jian Li, Jun Wu + Show 2 more

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https://doi.org/10.1155/2014/854681

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Abstract

We develop a coordination model of a one-manufacturer multi-retailers supply chain with a dominant retailer. We consider the impact of a dominant retailer on the market retail price and his sales promotion opportunity and examine how the manufacturer can coordinate such a supply chain by revenue-sharing contract after demand disruptions. We address the following important research questions in this paper. (i) How do we design an appropriate revenue-sharing contract to coordinate the supply chain with a dominant retailer without demand disruptions? (ii) When demand is disrupted with variations in market scale and price sensitive coefficient, can the original contract still be valid? (iii) How do the demand disruptions affect the coordination mechanism under different disruption scenarios and how should the new contract change? Finally, we generate important insights by both analytical and numerical examples.

Highlights

In the real world, there are some sudden events resulting in the change of demand abruptly, such as exposure of enterprises’ own problem, outbreak of infectious diseases, and policy change of the government
We address the following important research questions in this paper. (i) How do we design an appropriate revenue-sharing contract to coordinate the supply chain with a dominant retailer without demand disruptions? (ii) When demand is disrupted with variations in market scale and price sensitive coefficient, can the original contract still be valid? (iii) How do the demand disruptions affect the coordination mechanism under different disruption scenarios and how should the new contract change? we generate important insights by both analytical and numerical examples
We develop a coordination model of a supply chain with one manufacture and multiple retailers, one of which preserves its dominant position in the market

Summary

Introduction

There are some sudden events resulting in the change of demand abruptly, such as exposure of enterprises’ own problem, outbreak of infectious diseases, and policy change of the government. We investigate coordination of a onemanufacturer multi-retailers supply chain with one dominant retailer after demand disruptions. We regard the fringe retailers as a whole, for they are identical As it is assumed in [1, 5], our model is under the assumption of perfect information and all the partners of supply chain are risk-neutral. The manufacturer bears these deviation costs totally, which [6, 7] supported Based on these assumptions, we analyze the effect of demand disruptions on supply chain and propose corresponding coordination mechanism by revenue-sharing contracts.

Literature Review

The Basic Model

Supply Chain Coordination under Demand Disruptions

Numerical Examples

Conclusion