scholarly journals Optimal Decisions in a Single-Period Supply Chain with Price-Sensitive Random Demand under a Buy-Back Contract

2014 ◽  
Vol 2014 ◽  
pp. 1-11 ◽  
Author(s):  
Feng Wang ◽  
In-Chan Choi
Keyword(s):  
Supply Chain ◽  
Wholesale Price ◽  
Retail Price ◽  
Optimal Decision ◽  
Order Quantity ◽  
Random Demand ◽  
Demand Distribution ◽  
Single Period ◽  
Pareto Equilibrium ◽  
Buy Back

This paper studies a single-period supply chain with a buy-back contract under a Stackelberg game model, in which the supplier (leader) decides on the wholesale price, and the retailer (follower) responds to determine the retail price and the order quantity. We analytically investigate the decentralized retailer’s optimal decision. Our results demonstrate that the retailer has a unique optimal simultaneous decision on the retail price and the order quantity, under a mild restriction on the demand distribution. Moreover, as it can be shown that the decentralized supply chain facing price-sensitive random demand cannot be coordinated with buy-back contract, we propose a scheme for the system to achieve Pareto-improvement. Theoretical analysis suggests that there exists a unique Pareto-equilibrium for the supply chain. In particular, when the Pareto-equilibrium is reached, the supply chain is coordinated. Numerical experiments confirm our results.

scholarly journals Decentralized Supply Chains under Random Price-Dependent Demand: Noncooperative Equilibria vs. Coordination with Cost-Sharing Contracts

2020 ◽  
Vol 2020 ◽  
pp. 1-15
Author(s):  
Yanpeng Sun ◽  
Cheng Ma ◽  
Qi Sun
Keyword(s):  
Supply Chain ◽  
Cost Sharing ◽  
Wholesale Price ◽  
Retail Price ◽  
Lost Sales ◽  
Supply Chain System ◽  
Decentralized Supply Chain ◽  
Equilibrium Response ◽  
Buy Back ◽  
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.

scholarly journals The role of voucher sale in advance for a capital-constrained supply chain

2021 ◽  
Author(s):  
Haijun Wang ◽  
Guanmei Liu
Keyword(s):  
Supply Chain ◽  
Trade Credit ◽  
Stackelberg Game ◽  
Wholesale Price ◽  
Optimal Choice ◽  
Bank Loan ◽  
Optimal Decision ◽  
Order Quantity ◽  
Credit Financing ◽  
The Impact

This paper studies voucher sale as an operational method to raise working capital for a supply chain, which consists of a supplier and a capital-constrained retailer. The retailer takes advantage of an online platform to sell vouchers and to get access to borrowing from a bank. By formulating a Stackelberg game model, we show the retailer's possible order quantities in the cases without and with bank loan and analyze the impact of voucher sale on the retailer's optimal choice of order quantity and the supplier's optimal wholesale price. We find that a smaller voucher's price induces the retailer to be more likely to order with loan from a bank while a larger voucher's value induces an order quantity with the loan more difficult to be repaid. In addition, if voucher's price is large, the supplier decides a wholesale price which leads the retailer not to borrow from a bank; and if voucher's price is small, the supplier's optimal decision is obtained by anticipating the retailer to borrow from a bank. We also analyze the impact of voucher sale in the presence of trade credit financing on the firms' decisions. The results show that the voucher's price should be small so that the retailer can repay the supplier if voucher's value is large; otherwise, the retailer either does not borrow from the supplier or may not repay the supplier. Besides, the supplier decides a wholesale price so that the retailer does not borrow or can repay the supplier, except that the voucher's value is large and the voucher's price is medium.

Coordination of a Socially Responsible Two-Stage Supply Chain Under Random Demand

2019 ◽  
Vol 36 (05) ◽  
pp. 1950029
Author(s):  
Xia Zhao ◽  
Ning Li ◽  
Liang Song
Keyword(s):  
Supply Chain ◽  
Wholesale Price ◽  
Revenue Sharing ◽  
Expected Profit ◽  
Order Quantity ◽  
Random Demand ◽  
Coordination Problem ◽  
Socially Responsible ◽  
Numerical Examples ◽  
Corporate Social

This paper investigates the coordination problem of a supply chain (SC) composed of a manufacturer and a retailer both exhibiting corporate social responsibility (CSR) under generic random demand. Under a centralized decision, the unimodality of the expected profit is proven, and the expected profit of the SC is shown to be larger than that of the SC without CSR. Under a decentralized decision dominated by the manufacturer, the manufacturer determines the wholesale price and its CSR investment, and then the retailer decides the order quantity and its CSR investment. After showing that the revenue-sharing (RS) contract is not able to coordinate the SC, a modified RS (MRS) contract is proposed to coordinate the SC. At last, the numerical examples in which random demands follow normal distribution and uniform distribution are used to illustrate the validity of the theoretical analysis and the coordination effectiveness of the MRS contract.

scholarly journals Impact of Loss-Aversion on a Financially-Constrained Supply Chain

2019 ◽  
Vol 11 (9) ◽  
pp. 2680
Author(s):  
Jinpyo Lee
Keyword(s):  
Supply Chain ◽  
Interest Rate ◽  
Loss Aversion ◽  
Wholesale Price ◽  
Decision Makers ◽  
Optimal Decision ◽  
Optimal Order ◽  
Order Quantity ◽  
Credit Guarantee ◽  
The Interest Rate

Traditionally, in the area of production and operations management, the financial states and decision-makers’ behaviour regarding loss have been ignored in the supply chain, which may lead to infeasible or unrealistic practices or even catastrophic losses in practical supply chain operations. Therefore, this study aims to provide a model for operational efficiency in a financially constrained supply-chain system consisting of a financially deficient retailer, a supplier, and a bank, and to analyse the impact of the behaviour of the bank and the supplier on the operational decision. It is assumed that the bank provides a loan to the retailer considering the supplier’s credit guarantee for the retailer. The supplier’s credit guarantee implies that, if the retailer goes bankrupt after the sales season, then a pre-guaranteed proportion of the retailer’s loan is repaid by the supplier. Moreover, to capture the decision-makers’ behaviour regarding loss, it is assumed that the supplier and the bank are loss-averse in their risk preference on the final profit. Under this circumstance, it is intended to draw the theoretical implications by analysing a loss-averse behaviour model for a supplier and a bank, in which a kinked piecewise linear and concave utility function is considered. The optimal decision is analytically derived for the retailer (the optimal order quantity), the supplier (the optimal wholesale price), and the bank (the optimal interest rate). In addition, a sensitivity analysis is conducted to investigate how the model parameters affect the optimal decision for the retailer, the supplier, and the bank under different degrees of loss-aversion. The optimal decisions are shown to be highly affected by the degree of the loss-aversion coefficient of the bank and the supplier and to be more conservative than the result in the traditional case which optimises the risk-neutral expected profit (the unit degree of loss-aversion). The analytical results can be summarised as follows. First, as the wholesale price and the interest rate increase, the optimal order quantity decreases. Second, the more loss-averse the supplier is, the higher the optimal wholesale price that is offered to the retailer by the supplier. Third, the larger the credit guarantee that is provided to the retailer by the supplier, the higher the optimal wholesale price that is provided to the retailer. Fourth, the more loss-averse the bank is, the higher the interest rate that is offered to the retailer; and the larger the credit guarantee that is provided by the supplier, the lower the interest rate that is offered to the retailer.

scholarly journals Green Supply Chain Pricing and Performance: a Fairness Preferences and Green Marketing Perspective

2021 ◽  
Author(s):  
Hong Huo ◽  
Haiyan Zhong ◽  
Xiaoli Zhang
Keyword(s):  
Supply Chain ◽  
Wholesale Price ◽  
Retail Price ◽  
Green Marketing ◽  
Green Supply Chain ◽  
Optimal Decision ◽  
Market Demand ◽  
Efficient Operation ◽  
And Performance ◽  
The Impact

This study investigates optimal decisions in a green supply chain consisting of a manufacturer and a leading retailer considering the green marketing and fairness preferences of member firms. Four Stackelberg game decision models are constructed in which the manufacturer and the re-tailer engage in green marketing separately when the manufacturer has no and has fairness preferences. The impacts of fairness preferences and green marketing on the optimal decision in the green supply chain are comparatively analyzed. The study finds that member firms perform green marketing regardless of the presence or absence of fairness preferences and that such be-havior increases the wholesale price, retail price, and market demand of low-carbon products as well as the profits of member firms and the supply chain. A more interesting finding is that the profit growth of member firms and the supply chain due to the manufacturer’s green marketing is more pronounced than that due to the retailer’s green marketing. When the retailer and the manufacturer engage in conduct green marketing, the manufacturer's fairness preferences have different effects on the wholesale price, retail price, market demand, level of green marketing efforts, member enterprises and profits of supply chain. Therefore, firms should consider the impact of green marketing and fairness preferences to make pricing and performance decisions, so as to achieve efficient operation of the whole supply chain and avoid double marginal effects. Finally, the above conclusions are verified through numerical simulation, providing a reference for the decision-making of member firms in the green supply chain.

scholarly journals Trade Credit with Barter in a Capital-Constrained Supply Chain

2021 ◽  
Vol 13 (20) ◽  
pp. 11361
Author(s):  
Yangyang Huang ◽  
Zhenyang Pi ◽  
Weiguo Fang
Keyword(s):  
Supply Chain ◽  
Trade Credit ◽  
Wholesale Price ◽  
Uncertain Demand ◽  
Equilibrium Strategy ◽  
Optimal Order ◽  
Order Quantity ◽  
Supply Rate ◽  
Optimal Order Quantity ◽  
And Performance

Barter has emerged to alleviate capital pressure, maximize the circulation of goods, and facilitate the disposal of excess inventory. This study considers a two-level supply chain consisting of a manufacturer and a capital-constrained retailer with trade credit, in which the retailer exchanges unsold products for needed subsidiary products on a barter platform. The retailer’s optimal order quantity and the manufacturer’s wholesale price are derived, and the influences of barter and other factors on the equilibrium strategy and performance of the supply chain are examined; these results are verified and supplemented by numerical simulation. We find that the retailer can increase profit by bartering when facing highly uncertain demand, that the retailer’s optimal order quantity increases with the supply rate and demand for subsidiary products, and that both manufacturer and retailer benefit from the high supply rate of subsidiary products. However, barter induces the manufacturer to raise the wholesale price to prevent its profit from being harmed. In addition, the manufacturer suffers from the retailer’s initial capital.

scholarly journals Emergency Coordination Model of Fresh Agricultural Products’ Three-Level Supply Chain with Asymmetric Information

2016 ◽  
Vol 2016 ◽  
pp. 1-9 ◽  
Author(s):  
Juan Yang ◽  
Haorui Liu ◽  
Xuedou Yu ◽  
Fenghua Xiao
Keyword(s):  
Supply Chain ◽  
Asymmetric Information ◽  
Supply Chain Coordination ◽  
Wholesale Price ◽  
Nonlinear Function ◽  
Retail Price ◽  
Agricultural Products ◽  
Agricultural Product ◽  
Coordination Model ◽  
Emergency Events

In consideration of influence of loss, freshness, and secret retailer cost of products, how to handle emergency events during three-level supply chain is researched when market need is presumed to be a nonlinear function with retail price in fresh agricultural product market. Centralized and decentralized supply chain coordination models are studied based on asymmetric information. Optimal strategy of supply chain in dealing with retail price perturbation is caused by emergency events. The research reveals robustness for optimal production planning, wholesale price for distributors, wholesale price for retailers, and retail price of three-level supply chain about fresh agricultural products. The above four factors can keep constant within a certain perturbation of expectation costs for retailers because of emergency events; the conclusions are verified by numerical simulation. This paper also can be used for reference to the other related studies in how to coordinate the supply chain under asymmetric and punctual researches information response to disruptions.

scholarly journals Game Analysis and Coordination of a Closed-Loop Supply Chain: Perspective of Components Reuse Strategy

2020 ◽  
Vol 12 (22) ◽  
pp. 9681
Author(s):  
Xiaomin Zhao ◽  
Xueli Bai ◽  
Zhihui Fan ◽  
Ting Liu
Keyword(s):  
Game Theory ◽  
Supply Chain ◽  
Price Elasticity ◽  
Closed Loop ◽  
Economic Value ◽  
Wholesale Price ◽  
Optimal Decision ◽  
Closed Loop Supply Chain ◽  
Game Analysis

This paper studies a closed-loop supply chain that covers three key members: Manufacturer, new components supplier, and recycled-components supplier. Considering the power of each member in the chain, we use game theory to analyze the optimal decision and coordination, particularly investigating the economic value of components reuse strategy. The results show that, in a decentralized setting, the value of components reuse highly depends on the attributes of the products. For the products with low price elasticity, reuse strategy is only beneficial to the recycled-components suppliers. Further investigation shows the manufacturer can use wholesale price contracts to coordinate and improve the supply chain’s performance.

scholarly journals Contracts Adjustment under Bilateral Information Updating in a Supply Chain

Complexity ◽  
2020 ◽  
Vol 2020 ◽  
pp. 1-15
Author(s):  
Xinhui Wang ◽  
Yingsheng Su ◽  
Zihan Zhou ◽  
Yiling Fang
Keyword(s):  
Supply Chain ◽  
Production Cost ◽  
Wholesale Price ◽  
Transfer Payment ◽  
Market Demand ◽  
Order Quantity ◽  
Minimum Order ◽  
Information Updating ◽  
Minimum Order Quantity ◽  
Market Outlook

This paper investigates contracts adjustment between one manufacturer and one retailer under bilateral information updating. The manufacturer incurs uncertain production cost and the retailer faces uncertain demand, but they can acquire independent signals to update production cost and demand, respectively. They commit an initial agreement on an initial wholesale price, minimum order quantity, and information sharing as well as the transfer payment and decisions adjustment when information is updated. We find that due to the joint impact of production cost variation and market variation, the manufacturer may not decrease (increase) her wholesale price when the updated production cost is lower (higher) than expected. The retailer places an additional order even if the wholesale price rises when the market outlook is good, but places an order with the minimum order quantity even if the wholesale price falls when the market outlook is bad. Secondly, for a certain level of information accuracy of the production cost and market demand, the retailer is always better off with information updating, but the manufacturer may be worse off with information updating when facing a bad market outlook. Thirdly, when information accuracy of the production cost and market demand varies, the manufacturer only benefits from a high accuracy of production cost. Profits of the retailer and the supply chain are increasing (decreasing) with accuracy of production cost if the updated production cost is larger (smaller) than expected.

scholarly journals The More Supply Chain Control Power, the Better? A Comparison among Four Kinds of Cooperation Models

2015 ◽  
Vol 2015 ◽  
pp. 1-19 ◽  
Author(s):  
Weihua Liu ◽  
Shuqing Wang ◽  
Donglei Zhu
Keyword(s):  
Decision Making ◽  
Supply Chain ◽  
Supply Chain Coordination ◽  
Wholesale Price ◽  
The Other ◽  
Order Quantity ◽  
Control Power ◽  
Decentralized Decision Making ◽  
Optimal Value ◽  
Total Profit

This paper introduces the parameter of supply chain control power into existing supply chain coordination models and explores the impacts of control power on the profits of manufacturer, retailer, and the overall supply chain under four modes of decision-making, including the decentralized decision-making dominated by manufacturer, the decentralized decision-making dominated by retailer, centralized decision-making, and Nash negotiation decision-making. Some significant conclusions are obtained. Firstly, supply chain control power does have great impact on the supply chain profits. The profit of the whole supply chain with centralized decision-making is higher than those of the other three modes, while the overall profit of supply chain with decentralized decision-making is superior to the profit when retailer and manufacturer dominate the supply chain together. Secondly, with decentralized decision-making, for manufacturer and retailer, it is beneficial to gain the control powers of the supply chain; however, control power has an optimal value, not the bigger, the better. Thirdly, under certain circumstances, order quantity will increase and the wholesale price will decrease when control power is transferred from manufacturer to retailer. In this case, the total profit of supply chain dominated by retailer will be greater than that dominated by manufacturer.

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