SUPPLY CHAIN COORDINATION WITH UNCERTAINTY IN TWO-ECHELON YIELDS

2013 ◽  
Vol 30 (01) ◽  
pp. 1250044 ◽  
Author(s):  
HONGJUN PENG ◽  
MEIHUA ZHOU ◽  
LING QIAN
Keyword(s):  
Supply Chain ◽  
Risk Sharing ◽  
Supply Chain Coordination ◽  
Revenue Sharing ◽  
Optimal Order ◽  
Optimal Production ◽  
Numerical Examples ◽  
Advantages And Disadvantages ◽  
Profit Value ◽  
Production Decision

This paper researches the coordination models in the supply chain where there are uncertain two-echelon yields and random demand. We analyzed three contracts of revenue sharing (RS), overproduction risk sharing (OS), and combination of RS and OS (RO), and contrasted them with uncoordinated model. We studied the optimal order decision for downstream manufacturer and the optimal production decision for upstream manufacturer. Numerical examples were presented to illustrate the results. The study showed that the RS contract and OS sharing contract both have their advantages and disadvantages and the RO contract could benefit the whole supply chain best. We found out that the OS contract gives the upstream manufacturer incentive to produce more so as to maximize the profit value, but the upstream manufacturer may receive less as the price of overproduced part increases. We also found out that under most scenarios, the supply chain benefits from the yields and demand risks reduction and generates a higher profit. But sometimes in the OS contract the downstream manufacturer profit can increase as yields randomness increases. And, in the uncoordinated case and OS contract, the upstream manufacturer profit can increase as demand randomness increases.

scholarly journals Supply Chain Coordination under Stock- and Price-Dependent Selling Rates under Declining Market

2012 ◽  
Vol 2012 ◽  
pp. 1-14 ◽  
Author(s):  
Subrata Saha ◽  
Sambhu Das ◽  
Manjusri Basu
Keyword(s):  
Supply Chain ◽  
Supply Chain Coordination ◽  
Revenue Sharing ◽  
Stackelberg Games ◽  
Numerical Examples ◽  
Revenue Sharing Contract ◽  
Demand Rate ◽  
Time Price

We explore coordination issues of a two-echelon supply chain, consisting of a distributor and a retailer. The effect of revenue-sharing contract mechanism is examined under stock-time-price-sensitive demand rate. First, we investigate relationships between distributor and retailer under noncooperative distributor-Stackelberg games. Then we establish analytically that revenue sharing contact is able to coordinate the system and leads to the win-win outcomes. Finally, numerical examples are presented to compare results between the different models.

scholarly journals Assessing the coordinated revenue-sharing contract of China’s farmer-supermarket direct-purchase model

2021 ◽  
pp. 1-16
Author(s):  
Peng Liang ◽  
Melat Sima ◽  
Yu Huang ◽  
Xiaoyu Sun
Keyword(s):  
Supply Chain ◽  
Risk Sharing ◽  
Supply Chain Coordination ◽  
Revenue Sharing ◽  
Market Demand ◽  
Long Term Stability ◽  
Revenue Sharing Contract ◽  
Promotional Efforts

China began connecting farmers directly with supermarkets 10 years ago, when they were at a disadvantage and forced to sell products at low prices, as unstable cooperation among supply chain participants led to inequitable distribution of revenue. Revenue-sharing contracts offer a risk-sharing approach to ensure supply chain coordination and optimize profit for all. Research on short life cycle products with revenue-sharing contracts assume stable prices or investigate the effects of revenue-sharing contracts on supply chain coordination. This study introduced a revenue-sharing contract model into a ‘farmer-supermarket direct-purchase’ supply chain, considering price fluctuation and retail promotional efforts, stochastic market demand, among other factors. Revenue-sharing contracts achieved long-term stability in supply chain coordination, all participants obtained more profits, and the size of revenue-sharing parameter depends on the position and bargaining power of all participants. A case study on Tianhong supermarket and Nanxia farmer cooperative verified these findings, eliciting practical implications for professionals and policymakers.

scholarly journals A Coordinating Strategy for Biofuel Supply Chain under Disturbance Using Revenue Sharing Contract Approach

2018 ◽  
Vol 30 (2) ◽  
pp. 195-204 ◽  
Author(s):  
Nana Geng ◽  
Yong Zhang ◽  
Yixiang Sun
Keyword(s):  
Supply Chain ◽  
Alternative Energy ◽  
Supply Chain Coordination ◽  
Revenue Sharing ◽  
Optimal Order ◽  
Market Demand ◽  
Coordination Problem ◽  
Coordination Strategy ◽  
Revenue Sharing Contract ◽  
Biofuel Supply Chain

Biofuel is considered to be an important alternative energy in the future transportation. Its development is supported by the rest of the world. However, biofuel industry development is still very slow. From the previous research it is known that the supply chain coordination and other problems need to be solved to promote the supply chain ability. This paper studies biodiesel supply chain coordination problem from the view of disturbance management. It gives a disturbed coordination strategy which contains the optimal order quantity and the contract parameters. This paper has then verified the disturbed coordination strategy through using the actual data of Jiangsu Yueda Kate New Energy Co. Ltd. The result shows that when the market demand and the recovery cost are simultaneously disturbed, the coordination can make the biodiesel supply chain robust and the new strategy under the revenue sharing contract is better than the original one.

scholarly journals Coordination of a Random Yield Supply Chain with a Loss-Averse Supplier

2015 ◽  
Vol 2015 ◽  
pp. 1-11 ◽  
Author(s):  
Jiarong Luo ◽  
Xu Chen
Keyword(s):  
Supply Chain ◽  
Loss Aversion ◽  
Optimal Order ◽  
Random Yield ◽  
Order Quantity ◽  
Optimal Production ◽  
Numerical Examples ◽  
Risk Neutral ◽  
Production Quantity ◽  
Optimal Order Quantity

This paper investigates the coordination of a supply chain consisting of a loss-averse supplier and a risk-neutral buyer who orders products from the supplier who suffers from random yield to meet a deterministic demand. We derive the risk-neutral buyer’s optimal order policy and the loss-averse supplier’s optimal production policy under shortage-penalty-surplus-subsidy (SPSS) contracts. We also analyze the impacts of loss aversion on the loss-averse supplier’s production decision making and find that the loss-averse supplier may produce less than, equal to, or more than the risk-neutral supplier. Then, we provide explicit conditions on which the random yield supply chain with a loss-averse supplier can be coordinated under SPSS contracts. Finally, adopting numerical examples, we find that when the shortage penalty is low, the buyer’s optimal order quantity will increase, while the supplier’s optimal production quantity will first decrease and then increase as the loss aversion level increases. When the shortage penalty is high, the buyer’s optimal order quantity will decrease but the supplier’s optimal production quantity will always increase as the loss aversion level increases. Furthermore, the numerical examples provide strong evidence for the view that SPSS contracts can effectively improve the performance of the whole supply chain.

Three-Level Supply Chain Coordination with Revenue-Sharing Contract and Rebate-Penalty Contract

2010 ◽  
Vol 44-47 ◽  
pp. 195-199 ◽  
Author(s):  
Qing Hua Pang
Keyword(s):  
Decision Making ◽  
Supply Chain ◽  
Supply Chain Coordination ◽  
Revenue Sharing ◽  
Optimal Order ◽  
Revenue Sharing Contract ◽  
Decision Making Capacity ◽  
Bargaining Position ◽  
Reasonable Choice ◽  
Independent Decision

A supply chain is made up of independent entities having independent decision-making abilities, each intent on maximizing his benefits. The coordination of a three-level supply chain made up of one manufacturer, one distributor and one retailer is studied under the random demand. Firstly, the optimal order quantity is determined with the channel coordination of the supply chain; Secondly, the paper designs a combined contract (revenue-sharing contract & rebate-penalty contract, RS-RP contract) to coordinate the supply chain, namely, manufacturer offers distributor a revenue-sharing contract and distributor offers retailer a rebate-penalty contract. The paper validates that RS-RP contract can coordinate the three-level supply chain by choosing reasonable parameters. The reasonable choice of parameters can attain the win-win good among all business members, which will help to improve the decision-making capacity and competive ability of businesses involved in the supply chain, and the sizes of parameters in a reasonable range relate to the bargaining position of a business. Finally, the validity of the RS-RP contract is illustrated by a numerical example.

scholarly journals Supply Chain Coordination under Inventory Inaccuracy with RFID Technology

2018 ◽  
Vol 2018 ◽  
pp. 1-13 ◽  
Author(s):  
Quansheng Lei ◽  
Yin Zhang ◽  
Lingyu Zhou
Keyword(s):  
Supply Chain ◽  
Stackelberg Game ◽  
Supply Chain Coordination ◽  
Revenue Sharing ◽  
Coordination Mechanism ◽  
Economic Viability ◽  
Rfid Technology ◽  
Numerical Examples ◽  
Revenue Sharing Contract ◽  
Dependent Demand

In this paper we consider a two-echelon supply chain under price-dependent demand market and we use RFID to eliminate the effect of inventory inaccuracy. Models are built to evaluate the economic viability and coordination conditions. We analyze two scenarios in which the supply chain is defined, the integrated one and the decentralized one, respectively. For the integrated, we compare the different supply chain revenue with and without RFID technology and then determine the optimal inventory decisions. For the decentralized, we mainly focus on the coordination mechanism by revenue sharing contract under Stackelberg game. By seeking appropriate contract parameters, the supply chain can finally be coordinated while all partners are better off. Furthermore, numerical examples are given to verify our proposition.

Tactic of Supply Chain Coordination when the Freight Cost of Unit Product is Sensitive to Lot Size

2012 ◽  
Vol 601 ◽  
pp. 593-598 ◽  
Author(s):  
Hua Ming Gui
Keyword(s):  
Supply Chain ◽  
Lead Time ◽  
Supply Chain Coordination ◽  
Optimal Order ◽  
Optimal Size ◽  
Lot Size ◽  
Optimal Production ◽  
Decentralized Supply Chain ◽  
Product Delivery ◽  
Analytical Result

Considering a supply chain with a manufacturer and a wholesaler, we assume the freight cost of unit product is sensitive to lot size and the manufacturer is responsible for product delivery, the optimal lot size models under decentralized decision and centralized supply chain are presented. The analytical result shows that the more flexible the delivery capacity is, the smaller the optimal production size is, which is consistent with short order lead time and small lot size that claimed by the wholesaler. Therefore, the manufacturer can quickly respond to demand of the wholesaler under the condition that the total cost is invariable. Moreover, when the delivery capacity isn’t absolute flexibility, the manufacturer may motivate the wholesaler to undertake product delivery through reducing the transfer price so that the wholesaler’s optimal order size under decentralized supply chain is closer to both the manufacturer’s optimal production size and the entire supply chain’s optimal size under centralized supply chain, which may benefit the entire supply chain since both can obtain a win-win solution.

scholarly journals Supply Chain Coordination Contracts under Double Sided Disruptions Simultaneously

2015 ◽  
Vol 2015 ◽  
pp. 1-9 ◽  
Author(s):  
Huan Zhang ◽  
Yang Liu ◽  
Jingsi Huang
Keyword(s):  
Supply Chain ◽  
Supply Chain Coordination ◽  
Optimal Price ◽  
Supply Chain System ◽  
Pricing Policy ◽  
Product Cost ◽  
Numerical Examples ◽  
Supply Chain Contracts ◽  
Different Types ◽  
Key Factor

Supply chain coordination models are developed in a two-echelon supply chain with double sided disruptions. In a supply chain system, the supplier may suffer from the product cost disruption and the retailer suffers from the demand disruption simultaneously. The purpose of this study is to design proper supply chain contracts, under which the supply chain with double sided disruption can be coordinated. Firstly, the centralized decision-making models are applied to find the optimal price and quantity under three cases as the baseline. The different cases are divided by the different relationship between the product cost disruption and the demand disruption. Secondly, two different types of contracts are introduced to coordinate the whole supply chain. One is all-unit wholesale quantity discount policy (AQDP) contract, and the other one is capacitated linear pricing policy (CLPP) contract. And it is found out that the gap between the demand disruption and the product cost disruption is the key factor to influence the supply chain coordination. Some numerical examples and sensitivity analysis are given to illustrate the models. The AQDP contracts are listed out under different cases to show how to use it under double sided disruptions.

Supply Chain Coordination for E-Commerce: Risk Penalty vs. Flat Rate

2021 ◽  
Author(s):  
Ju Myung Song ◽  
Yao Zhao
Keyword(s):  
Supply Chain ◽  
Information Asymmetry ◽  
Risk Sharing ◽  
Supply Chain Coordination ◽  
Wholesale Price ◽  
Problem Definition ◽  
Third Party ◽  
Common Belief ◽  
Shipping Industry ◽  
Flat Rate

Problem definition: We study the coordination of an E-commerce supply chain between online sellers and third party shippers to meet random demand surges, induced by, for instance, online shopping holidays. Academic/practical relevance: Motivated by the challenge of meeting the unpredictable demand surges in E-commerce, we study shipping contracts and supply chain coordination between online sellers and third party shippers in a novel model taking into account the unique features of the shipping industry. Methodology: We compare two shipping contracts: the risk penalty (proposed by UPS) and the flat rate (used by FedEx), and analyze their impact on the seller, the shipper, and the supply chain. Results: Under information symmetry, the sophisticated risk penalty contract is no better than the simple flat rate contract for the shipper, against common belief. Although both the risk penalty and the flat rate can coordinate the supply chain, the risk penalty does so only if the shipper makes zero profit, but the flat rate can provide a positive profit for both. These results represent a new form of double marginalization and risk-sharing, in sharp contrast to the well-known literature on the classic supplier-retailer supply chain, where risk-sharing contracts (similar to the risk penalty) can bring benefits to all parties, but the single wholesale price contract (similar to the flat rate) can achieve supply chain coordination only when the supplier makes zero profit. We also find that only the online seller, but not the shipper, has the motivation to vertically integrate the seller-shipper supply chain. Under information asymmetry, however, the risk penalty brings more benefit to the shipper than the flat rate, but hurts the seller and the supply chain. Managerial implications: Our results imply that information plays an important role in the shipper’s choices of shipping contracts. Under information symmetry, the risk penalty is unnecessarily complex because the simple flat rate is as good as the risk penalty for the shipper; moreover, it is better for the seller-shipper coordination. However, under information asymmetry, the shipper faces additional shipping risk that can be offset by the extra flexibility of the risk penalty. Our study also explains and supports the recent practice of online sellers (e.g., Amazon.com and JD.com), but not shippers, to vertically integrate the supply chain by consistently expanding their shipping capabilities.

Sign in / Sign up

Export Citation Format

Share Document