Replenishment Decision and Coordination in the Agricultural Supply Chain under Supply Disruption

Abstract

This paper mainly focuses on the supplier and retailer how to deal with the supply disruption when it has happened. To end this, we establish a model which consists of a retailer, a supplier and a spot market. To get benchmark, we first investigate optimal decisions under the normal situation. Subsequently, we study the situation of supply disruption and get optimal decision of replenishment under two scenarios: centralized supply chain and decentralized supply chain. Comparing these results, we then find that the replenishment decision under decentralized supply chain is not consistent with that under centralized supply chain in most cases. It implies that supplier makes replenishment decision just according to her own situation which may undermine the supply chain's profits. To solve this issue, we finally develop a subsidy mechanism to achieve supply chain coordination and get the feasible range of parameter to lead win-win outcomes under supply disruption situation.