Coordinating a Supply Chain with Demand Disruption under o2o Business Model

Abstract

Abstract-A supply chain under o2o business model, a new kind of supply chain, is studied in this paper, in which the supply chain is comprised of one supplier (she) and multiple o2o retailers. The supplier observes that demand disruption takes place after her production plan is formulated. How to optimize the total supply chain profit in the centralized and the decentralized decisions is analyzed by using contract theory and game theory, which is also a new problem compared with the previous studies. The results obtained are as follows. In the centralized decision, the supplier needs to adjust the channel price if the disruption satisfies a given condition. If the disruption satisfies other conditions, the supplier needs to adjust both the channel retail price and the production quantity. In the decentralized decision, an improved revenue-sharing contract, a new supply contract, can coordinate the disrupted supply chain.