scholarly journals Coordinating a Supply Chain When Manufacturer Makes Cost Reduction Investment in Supplier

2016 ◽  
Vol 2016 ◽  
pp. 1-8 ◽  
Author(s):  
Shilei Huang ◽  
Hong Fu ◽  
Yongkai Ma
Keyword(s):  
Supply Chain ◽  
Cost Sharing ◽  
Cost Reduction ◽  
Production Efficiency ◽  
Optimal Investment ◽  
Coordination Mechanism ◽  
Uncertain Demand ◽  
Pareto Improvement ◽  
Investment Cost ◽  
Operating Decisions

We consider a supply chain consisting of an upstream supplier and a downstream manufacturer, in which the supplier provides a component to the manufacturer, facing a price-sensitive and uncertain demand. The manufacturer makes cost reduction investment in the supplier to improve the supplier’s production efficiency, which benefits the entire supply chain. We derive the optimal investment and operating decisions. Both the centralized and decentralized supply chains are studied. We show that the optimal investment and operating decisions in the decentralized setting may deviate from that in the centralized setting. To avoid the profit loss caused by such a deviation, we develop a coordination mechanism by introducing a combined policy of revenue-sharing policy and investment cost-sharing policy. We also show that the developed coordination mechanism can achieve Pareto improvement for the two players.

scholarly journals Supplier’s Joint Investments in Cost Reduction and Quality Improvement in a Decentralized Supply Chain

2017 ◽  
Vol 2017 ◽  
pp. 1-10 ◽  
Author(s):  
Hengyun Zhang ◽  
Dingjun Hong
Keyword(s):  
Supply Chain ◽  
Quality Improvement ◽  
Cost Reduction ◽  
Wholesale Price ◽  
Optimal Investment ◽  
Coordination Mechanism ◽  
Pricing Decisions ◽  
Decentralized Supply Chain ◽  
Investment Cost ◽  
Do So

We consider a decentralized supply chain with a downstream manufacturer and an upstream supplier. The upstream supplier sells a product to the manufacturer, who faces a quality and price sensitive demand. The supplier has a chance to invest in both cost reduction and quality improvement of its product. We derive the optimal investment and pricing decisions for the supply chain members. We do so in both the centralized and the decentralized supply chains. We show that the optimal investment and pricing decisions in the decentralized supply chain may deviate from that in the centralized supply chain. We develop a mechanism to coordinate the decentralized supply chain. The developed mechanism contains four policies: wholesale price, sharing of revenue, sharing of cost reduction investment cost, and sharing of quality improvement investment cost. We also show that the developed coordination mechanism can lead to Pareto improvement.

scholarly journals Pricing and Collection Rate for Remanufacturing Industry considering Capacity Constraint in Recycling Channels

Complexity ◽  
2020 ◽  
Vol 2020 ◽  
pp. 1-13 ◽  
Author(s):  
Lang Xu ◽  
Jia Shi ◽  
Jihong Chen
Keyword(s):  
Supply Chain ◽  
Production Cost ◽  
Closed Loop ◽  
Capacity Constraint ◽  
Coordination Mechanism ◽  
Selling Price ◽  
Pareto Improvement ◽  
Competition Intensity ◽  
Closed Loop Supply Chain ◽  
Collection Rate

This paper explores the decision-making and coordination mechanism of pricing and collection rate in a closed-loop supply chain with capacity constraint in recycling channels, which consists of one manufacturer and one retailer. On the basis of game theory, the equilibriums of decisions and profits in the centralized and decentralized scenarios are obtained and compared. Through the performance analysis of a different scenario, a higher saving production cost and lower competition intensity trigger the members to engage in remanufacturing. Furthermore, we try to propose a two-part tariff contract through bargaining to coordinate supply chain and achieve a Pareto improvement. The results show that when the capacity constraints in recycling channels exceed a threshold, the decisions and profit will change. Additionally, for closed-loop supply chain, the selling price is more susceptible to the influence of capacity constraint in recycling channel than the members’ profit.

Coordination and Decision of Supply Chain Under

2019 ◽  
Vol 12 (3) ◽  
pp. 21-46 ◽  
Author(s):  
Guangdong Liu ◽  
Tianjian Yang ◽  
Yao Wei ◽  
Xuemei Zhang
Keyword(s):  
Supply Chain ◽  
Numerical Analysis ◽  
Cost Sharing ◽  
Supply Chain Coordination ◽  
Pareto Improvement ◽  
Optimal Price ◽  
Decentralized System ◽  
Risk Neutral ◽  
Future Work ◽  
Dependent Demand

In order to investigate supply chain coordination and decision under customer balking and stochastic demand, the article considers a two-echelon supply chain consisting of one manufacturer with risk-neutral and one retailer with risk-neutral and develops two models in a centralized and a decentralized system and the three contracts are designed to coordinate supply chain and the optimal price and customer balking strategies are obtained. The results show that the revenue and cost-sharing contract can coordinate supply chain under customer balking and price-dependent demand and achieve the Pareto-improvement; the expected sales quantity and expected reduced sales quantity are influenced conversely by the threshold of inventory and probability of a sale under customer balking. In addition, numerical analysis is given to verify the effectiveness of revenue and cost-sharing contract and the paper gives some managerial insights and puts forward to the future work at last.

scholarly journals Differential Game Analyses of Logistics Service Supply Chain Coordination by Cost Sharing Contract

2014 ◽  
Vol 2014 ◽  
pp. 1-10 ◽  
Author(s):  
Haifeng Zhao ◽  
Bin Lin ◽  
Wanqing Mao ◽  
Yang Ye
Keyword(s):  
Supply Chain ◽  
Differential Game ◽  
Cost Sharing ◽  
Supply Chain Coordination ◽  
Coordination Mechanism ◽  
Stackelberg Equilibrium ◽  
Logistics Service ◽  
Service Supply Chain ◽  
The Cost ◽  
Relationship Of

Cooperation of all the members in a supply chain plays an important role in logistics service. The service integrator can encourage cooperation from service suppliers by sharing their cost during the service, which we assume can increase the sales by accumulating the reputation of the supply chain. A differential game model is established with the logistics service supply chain that consists of one service integrator and one supplier. And we derive the optimal solutions of the Nash equilibrium without cost sharing contract and the Stackelberg equilibrium with the integrator as the leader who partially shares the cost of the efforts of the supplier. The results make the benefits of the cost sharing contract in increasing the profits of both players as well as the whole supply chain explicit, which means that the cost sharing contract is an effective coordination mechanism in the long-term relationship of the members in a logistics service supply chain.

Coordination and Incentive Mechanisms on Collaborative Investment in the Supply Chain

2011 ◽  
Vol 486 ◽  
pp. 301-304
Author(s):  
Pei Zhao ◽  
Zhaong Kai Xiong ◽  
Yu Xiong
Keyword(s):  
Supply Chain ◽  
Cost Sharing ◽  
Financial Incentive ◽  
Tax Incentives ◽  
Third Party ◽  
Third Party Logistics ◽  
Incentive Mechanisms ◽  
Coordination Problems ◽  
Investment Cost ◽  
Internal Incentive

This paper examines coordination problems and corresponding incentive mechanisms between a retailer and a third-party Logistics for jointly investing in an information technology that has the potential to improve the efficiency and security of the supply chain. The conclusion indicates that internal incentive mechanisms, such as investment cost sharing among supply chain partners, are not likely to resolve underinvestment problems completely; Instead, external financial incentive mechanisms, such as tax incentives, need to be considered to coordinate the supply chain.

The effect of promotional cost sharing on the decisions of two-level supply chain with uncertain demand

2018 ◽  
Vol 290 (1-2) ◽  
pp. 747-781 ◽  
Author(s):  
Ata Allah Taleizadeh ◽  
Kannan Govindan ◽  
Nasim Ebrahimi
Keyword(s):  
Supply Chain ◽  
Cost Sharing ◽  
Uncertain Demand

scholarly journals Quality Visibility Improvement with Effort Alignment and Cost-Sharing Policies in a Food Supply Chain

2020 ◽  
Vol 2020 ◽  
pp. 1-17
Author(s):  
Wenbo Zhang ◽  
Qin Su
Keyword(s):  
Supply Chain ◽  
Food Supply ◽  
Cost Sharing ◽  
Risk Mitigation ◽  
Pareto Improvement ◽  
Food Supply Chain ◽  
Decentralized Supply Chain ◽  
Managerial Implications ◽  
And Performance ◽  
The Cost

Improving quality visibility along a food supply chain has been considered as a critical driver of quality risk mitigation, safety and security assurance, and performance sustainability. This paper explores the coordination mechanisms in a food supply chain, where the demand and costs are sensitive to the supply chain quality visibility that depends on an upstream supplier and a downstream retailer jointly, and the effort to improve quality visibility is increasingly expensive. After comparing the centralized and decentralized supply chain models to discover an opportunity for Pareto improvement, it is proved that a pure revenue-sharing contract fails to coordinate the supply chain, while the price discount contract with effort alignment policy or effort cost-sharing policy works. The two coordinating contracts’ boundary conditions of excluding deviated actions are presented. It is shown that the contract with effort alignment policy is cheaper but more rigid, whereas the cost-sharing one allows us to arbitrarily allocate the supply chain’s profits despite more information being collected. The models are applied to a fresh chicken supply chain in order to verify their effectiveness and robustness in reality. The impacts of several specific parameters on supply chain decisions and performances are analyzed, and the results reveal some meaningful managerial implications regarding supply chain quality visibility.

scholarly journals Joint Emission Reduction Dynamic Decisions and Coordination in a Supply Chain Considering Altruistic Behavior and Reference Low-Carbon Effect

2021 ◽  
Author(s):  
ziyuan zhang ◽  
Liying Yu
Keyword(s):  
Supply Chain ◽  
Cost Sharing ◽  
Emission Reduction ◽  
Altruistic Behavior ◽  
Intensity Increase ◽  
Low Carbon ◽  
Pareto Improvement ◽  
Reduce Emissions ◽  
The Cost ◽  
The Impact

Abstract In the context of low-carbon economy, supply chain members’ joint emission reduction issue has become a research hotspot, while there are few researches which synthetically studies the effect of consumers’ reference low-carbon effect and supply chain members’ altruistic behavior on their decisions. To study the impact of supply chain members’ altruistic behavior and consumers’ reference low-carbon effect on their joint emission reduction decisions and profits, we build optimization models under four decision scenarios, in which we solve the manufacturer’s and the retailer’s optimal emission reduction strategies and other equilibrium solutions by differential game theory. We obtain some findings. First, consumers' reference low-carbon effect will harm the profits of the manufacturer and the retailer, discourage the manufacturer's enthusiasm to reduce emissions and retailer's enthusiasm for low-carbon publicity. Second, the altruistic behavior of the manufacturer and the retailer can not only weaken the negative impact of the reference low-carbon effect, but also promote both parties to actively reduce emissions, help achieve Pareto improvement of their own profits and utilities, and obtain additional social welfare. Third, the cost-sharing contract can encourage the manufacturer to increase emission reduction investment without affecting the retailer’s low-carbon publicity investment, and can achieve a Pareto improvement of both parties’ profits and utilities. In addition, the cost-sharing ratio is only proportional to the marginal profits and altruistic intensity of both parties, and is not affected by the reference low-carbon effect. Meanwhile, the cost-sharing ratio will decrease as the manufacturer’s marginal profit and altruistic intensity increase, and will increase as the retailer’s marginal profit and altruistic intensity increase. In particular, when the retailer is completely altruistic, the cost-sharing contract can achieve perfect coordination of the supply chain.

scholarly journals Sharing Logistics Service Supply Chain with Revenue-Sharing vs. Cost-Sharing Contracts

2021 ◽  
Vol 2021 ◽  
pp. 1-31
Author(s):  
Ying Luo ◽  
Qiang Wei ◽  
Xinyu Gou ◽  
Dai Dai ◽  
Yiran Zhou
Keyword(s):  
Supply Chain ◽  
Cost Sharing ◽  
Joint Distribution ◽  
Revenue Sharing ◽  
Pareto Improvement ◽  
Logistics Service ◽  
Service Supply Chain ◽  
Distribution Company ◽  
Feasible Solutions ◽  
Study Designs

The purpose of this study is to explore the design of equity cooperation mechanism in the sharing logistics service supply chain. This study designs a two-echelon logistics service supply chain composed of an urban joint distribution company and N logistics companies. The urban joint distribution company is jointly established by N logistics companies based on specific shares of equity investment. We establish sharing logistics service supply chain models under revenue-sharing or cost-sharing contracts. Revenue-sharing factor or cost-sharing factor is the equity cooperation parameter. When the members of the supply chain choose to cooperate in revenue-sharing or cost-sharing mechanism, not all cooperation scenarios considered in the study can achieve Pareto improvement of the total profit of the supply chain, but at least one situation can achieve Pareto improvement. This study provides feasible solutions for logistics companies to join the sharing logistics service platform and provides a reference for the operation of a joint distribution platform established by logistics companies. New results and managerial insights are derived by the sharing logistics service supply chain with revenue-sharing vs cost-sharing contracts, which enriches the interfaces of the operation of the sharing logistics service supply chain.

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