The Incentive Mechanism Coordination Model of the Military Enterprises-Led Supply Chain

Abstract

Because of the inconsistent objectives of decision-makers and asymmetric information, the efforts and enthusiasm of the military supply chain members will not only affect their own benefits, but also produce adverse selection and moral hazard problems, and even affect the supply chain stable operation. Therefore, it is necessary to establish a reasonable and effective coordination rules and procedures, namely the incentive mechanism, in order to achieve the goal of supply chain system to meet the needs of military users. To stimulate the motivation and enthusiasm of each the supply chain member, and the military supply chain overall revenue also achieve the maximization, The paper applies the incentive mechanism design & game theory, designs a transfer payment incentive mechanism model between the supply chain channel members according to the order quantity size, tries to change the expected profit objective function of the incented object, makes them to choose the optimal effort level coincided with the military supply chain total expected revenue, establishes a long-term cooperative partnership each other based on mutual trust and information sharing, gives full play to their respective advantages, achieves the supply chain collaboration efficiency improved purpose, and ultimately realizes the goal to improve the military logistic support capability. This study method mainly refers to the use of certain means to regulate economic interests to stimulate and restrain the decision-making behavior of military enterprises and warehouses, enhance and mobilize their motivation and enthusiasm. The study conclusion has important reference value to improve the coordination level of army and local and the military logistic support effectiveness.