A two-stage capacity reservation supply contract with risky supplier and forecast updating

Cheaitou, Ali; Cheaytou, Rima

doi:10.1016/j.ijpe.2018.01.019

Cited by 28 publications

(9 citation statements)

References 75 publications

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“…Comparing Equations (19) and (20) with Equations (15) and (16), we find that the supplier's production decision and the manufacturer's order decision coincide with the optimal decisions of the centralized supply chain. The hybrid optionbuyback contract can coordinate the supply chain with demand information updating.…”

Section: Supply Chain Coordinationmentioning

confidence: 82%

“…They design a new menu of reservation contracts consisting of unit reservation fee, reservation quantity and final order quantity to ensure the manufacturer truthfully reveals its cost information. Cheaitou and Cheaytou [15] propose a two-stage capacity reservation contract in which the retailer has two ordering opportunities before and after demand information updating. Using the dynamic program approach, they characterize the structure of the retailer's optimal policy.…”

Section: 2mentioning

confidence: 99%

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Coordinating a supply chain with demand information updating

Yang¹,

Peng²

2022

JIMO

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<p style='text-indent:20px;'>We investigate how to coordinate a two-echelon supply chain in which a supplier builds production capacity in advance and a manufacturer makes the ordering decision based on updated demand information. By combining European call option and buyback mechanisms, we propose a new hybrid option-buyback contract to coordinate such a supply chain with demand information updating. We construct a two-stage optimization model in that the supplier offers option price and the manufacturer decides initial ordering quantity in the first stage, then the supplier offers exercise price and buyback price and the manufacturer decides final ordering quantity in the second stage after demand information is updated. In both the centralized and decentralized settings, we analytically derive the optimal equilibrium solutions of two-stage ordering quantity. Particularly, we obtain closed-form formulae to describe the members' optimal behavior with a bivariate uniformly distribution. We prove that the proposed contracts can realize the perfect coordination of the supply chain and analyze how the proposed contracts affect the members' decisions. The theoretical results show that, by tuning the option price or buyback price, the supply chain profit can be arbitrarily split between the members, which is a desired property for supply chain coordination. Compared with the standard option and buyback contract, the proposed contract results in a greater supply chain profit and achieves Pareto improvement for the supply chain members. Furthermore, extending the baseline model focusing on price-independent demand to the case of price-dependent demand, we show that the proposed contract still can achieve supply chain coordination. Numerical examples are also conducted to complement the theoretical results.</p>

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Section: Supply Chain Coordinationmentioning

confidence: 82%

Section: 2mentioning

confidence: 99%

Coordinating a supply chain with demand information updating

Yang¹,

Peng²

2022

JIMO

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“…In fact, the fresh agricultural produce supply chain in the real world is always composed of multiple members and participants, who may compete with each another. Therefore, an important research direction to consider will be to study more complex market structure (Chen et al, 2016;Cheaitou et al, 2019). Secondly, different consumers have different preferences for freshness, but they do not investigate the impact of consumer behavior on the supply chain management.…”

Section: Discussionmentioning

confidence: 99%

Decisions and coordination of retailer-led fresh produce supply chain under two-period dynamic pricing and portfolio contracts

Yan

Han

2022

RAIRO-Oper. Res.

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Fresh agricultural produce is almost the staple food and necessity of people's daily diet all over the world. However, natural perishability and freshness affect the demand for fresh agricultural produce. Due to the change of freshness, the retailer has to adopt a multi-period dynamic pricing strategy to deal with unsold products. The research object of this paper is the retailer's two-echelon supply chain of fresh agricultural produce, and the aim is to achieve the optimal two-period coordination and ordering through options and wholesale contracts in the supply chain. In the case of two-period pricing, we find that the optimal wholesale order quantity increases with the decline of the price in the first period and tends to be stable with the decline of the price in the second period. In contrast, the price change in the first period has a greater impact on the retailer's optimal order quantity. The profits of both the retailer and the supplier increase significantly with the increase of the price in the first period, while the impact of the change of the price in the second period is not obvious. Meanwhile, decentralized decision-making can only be coordinated in the supply chain through the original option contract at the first-period price. In the second period, the cost-sharing contract is introduced to coordinate the supply chain, increase orders, and increase the profits of both the retailer and the supplier. These findings are of great significance for both the retailer and the supplier in the multi-period dynamic pricing of fresh produce under the option contract.

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“…Given the forecast of uncertain demand ε 1 in the first stage, the uncertain demand ε 2 in the second stage is represented by the distribution function F 1 (.|ε 1 ) and the density function f 1 (.|ε 1 ). With the forecast of uncertain demand ε 2 in the second stage, the actual uncertain demand ε is characterized by distribution and density functions F 2 (.|ε 2 ) and f 2 (.|ε 2 ), respectively [40]. We assume that the forecasts of uncertain demand in each stage are non-negative, and all distributions are continuous, differentiable, and integrable.…”

Section: Model Descriptionmentioning

confidence: 99%

Ordering Decisions with an Unreliable Supplier under the Carbon Cap-and-Trade System

Ren,

Bian,

et al. 2023

Sustainability

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The global focus on carbon reduction has intensified, prompting numerous high-energy-consuming enterprises to venture into the carbon cap-and-trade system. However, in recent years, the emergence of destabilizing factors has introduced disruptions to supply chains. The study addresses the two-stage ordering problem for a manufacturer under the carbon cap-and-trade system. In the first stage, the manufacturer engages in green investments and places orders with both an unreliable and a reliable supplier. After updating demand forecast information in the second stage, orders are placed with the backup supplier, and carbon allowances are settled at the end of the period. Under these conditions, three supply scenarios of the unreliable supplier are considered: time-varying supply with imperfect demand updates, all-or-nothing supply with imperfect demand updates, and time-varying supply with perfect demand updates. Optimal ordering decisions are provided for each scenario. We find that when demand updates are imperfect, the manufacturer will invariably engage with the unreliable supplier. However, when demand updates are perfect, the manufacturer may choose to forgo the unreliable supplier. Next, we analyze the influence of carbon trading prices on ordering decisions in these scenarios. We find that when the probability of disruption is substantial, dual sourcing must exist in the first stage under the all-or-nothing supply. Finally, we conduct numerical analysis by utilizing parameters, such as carbon trading prices, as referenced in the existing literature. Through numerical analysis, we find that opting for the all-or-nothing supplier becomes economically advantageous for the manufacturer when the backup supplier is profitable. Conversely, when the backup supplier is not profitable, the manufacturer tends to opt for the unreliable supplier with time-varying supply. Moreover, optimal profit for the manufacturer is not achieved when demand updates are perfect.

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A two-stage capacity reservation supply contract with risky supplier and forecast updating

Cited by 28 publications

References 75 publications

Coordinating a supply chain with demand information updating

Coordinating a supply chain with demand information updating

Decisions and coordination of retailer-led fresh produce supply chain under two-period dynamic pricing and portfolio contracts

Ordering Decisions with an Unreliable Supplier under the Carbon Cap-and-Trade System

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