Analysis of production-inventory decisions in a decentralized supply chain with price-dependent demand

It is common for a supplier to sell products to multiple retailers. In this paper, we investigate the equilibrium behavior of a decentralized supply chain with multiple retailers facing a random price-dependent demand in the additive form. Here, we consider two kinds of demand functions: the distribution of the demand depends only on the retailer’s own retail price (noncompeting retailers) and not only on his own retail price but also on that of the other retailers (competing retailers). We present appropriate wholesale price, buy-back, and lost-sales cost-sharing contracts to coordinate the total supply chain, so that when all the retailers adopt their equilibrium response, the supply chain system coordination is also achieved. Furthermore, the coalition formation among retailers is also analyzed. We find that with buy-back and lost-sales cost-sharing contracts and linear price-dependent demand function, retailers always prefer being in the grand coalition to forming any other coalition.

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A Multistage Sustainable Production–Inventory Model with Carbon Emission Reduction and Price-Dependent Demand under Stackelberg Game

Applied Sciences ◽

10.3390/app10144878 ◽

2020 ◽

Vol 10 (14) ◽

pp. 4878

Author(s):

Chi-Jie Lu ◽

Tian-Shyug Lee ◽

Ming Gu ◽

Chih-Te Yang

Keyword(s):

Supply Chain ◽

Carbon Emissions ◽

Stackelberg Game ◽

Carbon Tax ◽

Inventory Model ◽

Sustainable Production ◽

Equilibrium Solutions ◽

Production Inventory ◽

Dependent Demand ◽

Tax Regulation

This paper investigated a multistage sustainable production–inventory model for deteriorating items (i.e., raw materials and finished goods) with price-dependent demand and collaborative carbon reduction technology investment under carbon tax regulation. The model was developed by first defining the total profit of the supply chain members under carbon tax regulation and, second, considering a manufacturer (leader)–retailer (follower) Stackelberg game. The optimal equilibrium solutions that maximize the manufacturer’s and retailer’s total profits were determined through the method analysis. An algorithm complemented the model to determine the optimal equilibrium solutions, which were then treated with sensitivity analyses for the major parameters. Based on the numerical analysis, (a) carbon tax policies help reduce carbon emissions for both the manufacturer and retailer; (b) most carbon emissions from supply chain operations negatively impact the total profits of both members; (c) the retailer may increase the optimal equilibrium selling price to respond to an increase in carbon emissions from supply chain operations or carbon tax; and (d) autonomous consumption positively affects both members’ optimal equilibrium policies and total profits, whereas induced consumption does the opposite. These findings are very managerial and instructive for companies seeking profits and fulfilling environmental responsibility and governments.

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A Composite Contract for Coordinating a Supply Chain with Price and Effort Dependent Stochastic Demand

Mathematical Problems in Engineering ◽

10.1155/2016/3650605 ◽

2016 ◽

Vol 2016 ◽

pp. 1-9 ◽

Cited By ~ 2

Author(s):

Yu-Shuang Liu ◽

Yun Shang ◽

Hong-yan Su

Keyword(s):

Supply Chain ◽

Supply Chain Coordination ◽

Stochastic Demand ◽

Channel Coordination ◽

Numerical Examples ◽

Effort Level ◽

Decentralized Supply Chain ◽

Inventory Decisions

As the demand is more sensitive to price and sales effort, this paper investigates the issue of channel coordination for a supply chain with one manufacturer and one retailer facing price and effort dependent stochastic demand. A composite contract based on the quantity-restricted returns and target sales rebate can achieve coordination in this setting. Two main problems are addressed: (1) how to coordinate the decentralized supply chain; (2) how to determine the optimal sales effort level, pricing, and inventory decisions under the additive demand case. Numerical examples are presented to verify the effectiveness of combined contract in supply chain coordination and highlight model sensitivities to parametric changes.

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