Robustness of Supply Chain Coordination Contracts: Taxonomy, Examples, and Structural Results

Abstract

Supply chain coordination and associated contracts have been active research topics in supply chain management. Yet, little has been done in addressing the robustness of the design, evaluation, and implementation of such contracts. We develop a consistency framework for supply chain contracts and classify a number of well-studied contracts into groups. We demonstrate with examples that a contract can be evaluated by its consistency properties. Based on precise mathematical definitions and subsequently developed structural properties and management insights, we are not only able to measure the quality of a contract but also to reveal the nature of its coordination. Our findings open an avenue for design, evaluation and implementation of supply chain coordinating contracts.