scholarly journals Supply Chain Bilateral Coordination with Option Contracts under Inflation Scenarios

2015 ◽  
Vol 2015 ◽  
pp. 1-16 ◽  
Author(s):  
Nana Wan ◽  
Xu Chen
Keyword(s):  
Supply Chain ◽  
Supply Chain Coordination ◽  
Wholesale Price ◽  
Coordination Mechanism ◽  
Key Factors ◽  
Model Framework ◽  
Bilateral Coordination ◽  
Option Contracts ◽  
Optimal Ordering ◽  
The Impact

There exist obvious changes in price and demand during the inflationary period, both of which are regarded as the key factors leading to supply chain uncertainty. In this paper, we focus our discussion on price increase and demand contraction caused by inflation, integrate the effect of inflation and option contracts within the model framework, and analyze how to use option contracts to achieve supply chain coordination under inflation scenarios. We consider a one-period two-stage supply chain consisting of one supplier and one retailer and explore the effect of inflation on the optimal ordering and production decisions under three different types of contracts: wholesale price contracts, option contracts, and portfolio contracts. Moreover, we explore the impact of option contracts on the supply chain through using wholesale price contracts model as the benchmark. We find that the retailer prefers adopting portfolio contracts, but the supplier prefers providing option contracts under inflation scenarios. Ultimately, option contracts will be implemented owing to the supplier’s market dominant position. In addition, we discuss the supply chain bilateral coordination mechanism with option contracts from the perspectives of two members and derive that option contracts can coordinate the supply chain and achieve Pareto improvement under inflation scenarios.

scholarly journals Bilateral Coordination Strategy of Supply Chain with Bidirectional Option Contracts under Inflation

2015 ◽  
Vol 2015 ◽  
pp. 1-16 ◽  
Author(s):  
Nana Wan ◽  
Xu Chen
Keyword(s):  
Supply Chain ◽  
Stackelberg Game ◽  
Wholesale Price ◽  
Coordination Mechanism ◽  
Optimal Decision ◽  
Bilateral Coordination ◽  
Coordination Strategy ◽  
Option Contracts ◽  
Decision Variables ◽  
Optimal Ordering

As far as the price increase and the demand contraction caused by inflation are concerned, we establish a Stackelberg game model that incorporates bidirectional option contracts and the effect of inflation and derive the optimal ordering and production policies on a one-period two-stage supply chain composed of one supplier and one retailer. Through using the model of wholesale price contracts as the benchmark, we find that the introduction of bidirectional option contracts can benefit both the supplier and the retailer under inflation scenarios. Based on the conclusions drawn above, we design the bilateral coordination mechanism from the different perspective of two members involved and discuss how bidirectional option contracts should be set to achieve channel coordination under inflation scenarios. Through the sensitivity analysis, we illustrate the effect of inflation on the optimal decision variables and the optimal expected profits of the two parties with bidirectional option contracts.

scholarly journals Research on the supply chain model based on the differentiation of green agricultural products

2018 ◽  
Vol 232 ◽  
pp. 02012
Author(s):  
Hui Su ◽  
Yuquan Cui ◽  
Bingjie Liu
Keyword(s):  
Supply Chain ◽  
Utility Function ◽  
Stackelberg Game ◽  
Supply Chain Coordination ◽  
Wholesale Price ◽  
Agricultural Products ◽  
Coordination Mechanism ◽  
Optimal Decision ◽  
Quality Level ◽  
Chain Model

This paper studies the supply chain of green agricultural products with "agricultural super docking" mode based on the different management. The "agricultural super docking" mode is a direct connection between supermarkets and farmers (or cooperatives), what the supermarket needs and what the farmers produce. The green degree is used to indicate the quality level of health, safety and nutrition of agricultural products. The greater the green degree is, the better the quality of agricultural products is. In order to meet the needs of all consumers, the supermarket decide to carry out different management. That is to say, supermarket sells ordinary agricultural products and green agricultural products at the same time. This paper gives the consumer utility function for ordinary agricultural products and green agricultural products separately. We analyze the consumers’ choice behaviors based on the consumer utility function .We discuss the optimal decision of supermarket choosing one farmer and supermarket choosing two farmers based on Stackelberg game. It can be seen from the comparison that supermarket can get more profits when it chooses two farmer to order separately. Finally, a "wholesale price + ordering subsidy" coordination mechanism is proposed to realize supply chain coordination. .

scholarly journals Optimal Ordering Decision and Information Leakage Preference Under Asymmetric Forecast Signal

2021 ◽  
Author(s):  
Min Tang ◽  
Li Jiang ◽  
Zhiguo Li ◽  
Hongwu Zhang
Keyword(s):  
Supply Chain ◽  
Wholesale Price ◽  
Information Leakage ◽  
The Other ◽  
Market Demand ◽  
Forecasting Accuracy ◽  
Optimal Ordering ◽  
The Impact

Abstract This work investigates the retailer's sourcing decision with or without information leakage and studies the impact of the retailer's inaccurate prediction on supply chain members' preferences for information leakage. To derive the retailers' optimal sourcing quantities under two scenarios, one without and one with information leakage, we formulate a supply chain in which a common manufacturer offers a wholesale price contract to two competing retailers, one of whom (the incumbent) has private prediction information about the market demand, the other one (the entrant) doesn't. Then, we compare the supply chain members' performances, the results show that the manufacturer will prefer no information leakage when the incumbent's forecasting accuracy is high and the forecasting signal is low-type; the incumbent may prefer information leakage under certain conditions; contrary to intuition, the entrant may prefer no information leakage under certain conditions. Meanwhile, we find that the incumbent has an incentive to mimic a low state one by sourcing less product when she forecasts that the market demand will be high under the scenario of information leakage, and interestingly, the incumbent will earn less than the entrant when she obtains a low-type forecast signal under no information leakage.

scholarly journals Can cost sharing contracts coordinate green supply chains based on manufacturers’ overconfidence

2021 ◽  
Vol 236 ◽  
pp. 04014
Author(s):  
Hui Zhou
Keyword(s):  
Supply Chain ◽  
Supply Chains ◽  
Cost Sharing ◽  
Supply Chain Coordination ◽  
Wholesale Price ◽  
Numerical Experimentation ◽  
Set Up ◽  
The Cost ◽  
Green Supply Chains ◽  
The Impact

Cost sharing contracts is one of the most common contracts to coordinate green supply chains. In this paper, we examine whether it can coordinate green supply chains in the set up of overconfidence. We assume that the manufacturer is overconfident and the retailer is rational. The manufacturer overestimates consumers’ sensitivity to product greenness and accurately estimates the uncertainty of demand. The overconfident manufacturer and the rational retailer cooperate through cost sharing contracts. Then, we construct a game theoretical model to analyze the impact of manufacturers’ overconfident on product greenness, pricing, profit and supply chain cooperation. At last, a numerical experimentation is presented. We find that, (1) the product greenness, wholesale price and retail price increase with the manufacturer’s overconfidence as well as the retailer’s cost sharing proportion. (2) no matter how much the cost sharing proportion is, the profit of manufacturers and retailers decreases with the manufacturer’s overconfidence level. (3) cost sharing contracts can achieve the green supply chain coordination in rational setting. But under manufacturers’ overconfidence, it cannot.

scholarly journals Design of risk sharing and coordination mechanism in supply chain under demand and supply uncertainty

2021 ◽  
Author(s):  
Chunyi Ji ◽  
Xiangxiang Liu
Keyword(s):  
Supply Chain ◽  
Risk Sharing ◽  
Supply Chain Coordination ◽  
Wholesale Price ◽  
Coordination Mechanism ◽  
Market Demand ◽  
Supply Uncertainty ◽  
Demand Forecast ◽  
Demand And Supply ◽  
Better Than

Perishable and short-life products can be seen everywhere in life. Due to the particularity of these products, they are more complicated in supply chain management. This paper studies whether the two-part tariff and ZRS contract can achieve the purpose of reducing risks and coordinating supply chain. We assume that market demand and supplier yield are uncertain, and we use game theory and probability distribution for research. The research results show that when the information is asymmetric, the manufacturer always ignore the demand forecast information provided by the retailer under the wholesale price contract. When the demand is uncertain, regardless of whether the information is symmetric or asymmetric, the two-part tariff contract and the ZRS contract can coordinate the supply chain and achieve maximum profit. When the retailer's degree of risk aversion is high, the ZRS contract is better than the two-part tariff, which can reduce the risk of retailers and achieve the purpose of coordinating the supply chain. When the supply is uncertain, the manufacturer can provide the supplier with a risk-sharing contract, including the return price and the sharing ratio that meet certain constraints. Such a contract can effectively reduce the supplier's risk and realize supply chain coordination.

scholarly journals Coordinating a Supply Chain with Risk-Averse Agents under Demand and Consumer Returns Uncertainty

2013 ◽  
Vol 2013 ◽  
pp. 1-10 ◽  
Author(s):  
Jian Liu ◽  
Yong He
Keyword(s):  
Supply Chain ◽  
Supply Chain Coordination ◽  
Wholesale Price ◽  
Risk Attitude ◽  
Price Policy ◽  
Optimal Order ◽  
Risk Averse ◽  
Coordination Problem ◽  
Consumer Returns ◽  
The Impact

This paper examines the optimal order decision in a supply chain when it faces uncertain demand and uncertain consumer returns. We build consumer returns model with decision-makers’ risk preference under mean-variance objective framework and discuss supply chain coordination problem under wholesale-price-only policy and the manufacturer’s buyback policy, respectively. We find that, with wholesale price policy, the supply chain cannot be coordinated whether the supply chain agents are risk-neutral or risk-averse. However, with buyback policy, the supply chain can be coordinated and the profit of the supply chain can be arbitrarily allocated between the manufacturer and the retailer. Through numerical examples, we illustrate the impact of stochastic consumer returns and the supply chain agents’ risk attitude on the optimal order decision.

scholarly journals Dynamic Adjustment Mechanism and Differential Game Model Construction of Mask Emergency Supply Chain Cooperation Based on COVID-19 Outbreak

2021 ◽  
Vol 13 (3) ◽  
pp. 1115
Author(s):  
Shufan Zhu ◽  
Kefan Xie ◽  
Ping Gui
Keyword(s):  
Supply Chain ◽  
Differential Game ◽  
Production Technology ◽  
Wholesale Price ◽  
Transfer Payment ◽  
Dynamic Adjustment ◽  
Supply Chain System ◽  
Government Subsidies ◽  
Technology Investment ◽  
The Impact

Incorporating the impact of the COVID-19 pandemic on the mask supply chain into our framework and taking mask output as a state variable, our study introduces the differential game to study the long-term dynamic cooperation of a two-echelon supply chain composed of the supplier and the manufacturer under government subsidies. The study elaborates that government subsidies can provide more effective incentives for supply chain members to cooperate in the production of masks compared with the situation of no government subsidies. A relatively low wholesale price can effectively increase the profits of supply chain members and the supply chain system. The joint contract of two-way cost-sharing contract and transfer payment contract can promote production technology investment efforts of the supply chain members, the optimum trajectory of mask production, and total profit to reach the best state as the centralized decision scenario within a certain range. Meanwhile, it is determined that the profits of supply chain members in the joint contract can be Pareto improvement compared with decentralized decision scenario. With the increase of production technology investment cost coefficients and output self-decay rate, mask outputs have shown a downward trend in the joint contract decision model. On the contrary, mask outputs would rise with growing sensitivity of mask output to production technology investment effort and increasing sensitivity of mask demand to mask output.

Implications of Price Matching in Supply Chain Negotiation

2021 ◽  
Author(s):  
Weixin Shang ◽  
Gangshu (George) Cai
Keyword(s):  
Supply Chain ◽  
Social Welfare ◽  
Wholesale Price ◽  
Consumer Welfare ◽  
Problem Definition ◽  
Nash Bargaining ◽  
Price Matching ◽  
The Impact ◽  
Multiple Buyers ◽  
Wholesale Pricing

Problem definition: Few papers have explored the impact of price matching negotiation (PM), in which a channel matches its price with the resulting wholesale price bargained by another channel, on firms’ performances, consumer welfare, and social welfare, with and without supply chain coordination. Academic/practical relevance: Negotiation has been widely seen in determining both uniform and discriminatory wholesale prices, which affect outcomes of competitive supply chain practices. Methodology: To characterize the PM mechanism, we use game theory and Nash bargaining theory to compare PM with simultaneous negotiation (SN) through a common-seller two-buyer differentiated Bertrand competition model. Results: Our analysis reveals that PM can benefit the seller but hurt all buyers, which is at odds with some fair wholesale pricing clauses intending to protect buyers. Under coordination with side payments, however, all firms can conditionally benefit more from PM than from SN. Despite firms’ gains, PM leads to less consumer utility and social welfare compared with SN, unless the second buyer in PM is considerably less powerful than the first buyer. Coordination further worsens PM’s negative impact on consumer utility and social welfare. Moreover, the existence of a spot market can increase the wholesale price in PM, hurting buyers, consumers, and society. Furthermore, the qualitative results about PM remain robust under an alternative disagreement point for PM, multiple buyers, and other extensions. Managerial implications: This paper delivers insights on when price matching in supply chain wholesale price negotiation can benefit a seller, buyers, consumers, and society in a variety of scenarios. It advocates how managers can use PM to their own advantages and provides rationale to decision makers for policy regulations regarding wholesale pricing.

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.

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