How to coordinate supply chain under O2O business model when demand deviation and retailer's sales cost deviation happen

Abstract

A supply chain consisting of one supplier and one O2O retailer is studied in this paper. The retailer sells product to customers by using O2O e-commerce platform and customers receive the product offline. The supply chain is coordinated under the quantity discount contract in stable case. Disruption makes the price sensitivity coefficient and the retailer's sales cost change simultaneously after the production plan in the supply chain is formulated. In centralized supply chain, the supplier only needs to adjust the retail price if the deviations satisfy certain condition. The supplier needs to adjust the retail price and the production quantities if the deviations are large enough. In decentralized decision, the supply chain cannot be coordinated. This means that the original quantity discount contract cannot coordinate the disrupted O2O supply chain. An improved quantity discount contract which is used to coordinate the disrupted supply chain is put forward. The research shows that the improved contract can coordinate the original supply chain and the disrupted supply chain, which means that the contract has robustness when facing the price sensitivity coefficient deviation and the retailer's sales cost deviation. Finally, some numerical examples are shown.