Supply chain coordination based on return contracts with a threshold ordering quantity

Cai, Jianhu; Deng, Shuai; Hu, Xiaoqing; Han, Yi; Cheng, Haifang; Huang, Weilai

doi:10.1111/itor.12140

Cited by 10 publications

(7 citation statements)

References 32 publications

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“…Cachon (2003) provides an excellent review of this field prior to 2003. Cai et al (2015) use a new type of return contract with a threshold ordering quantity to address the problem in which retailers tend to order more than necessary and leave suppliers with large after-season returns. Wang et al (2015) study optimal pricing contracts and the level of information asymmetry in a supply chain.…”

Section: Literature Reviewmentioning

confidence: 99%

Impact of cost uncertainty on supply chain competition under different confidence levels

Liu

Zhou

Chen

et al. 2018

Int Trans Operational Res

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This paper considers two competing supply chains that face cost uncertainty, each consisting of one supplier and one retailer. To address the uncertain cost information, we propose a decision rule based on confidence levels to measure the goals of the supply chain participants. We provide the new concept of the belief-degree cost of a supply chain that embodies the decision maker's ability to comprehensively address information uncertainty and control the risk caused by information uncertainty. We find that regardless of which of the three games it is in-integrated, hybrid, or decentralized-a chain should order more and thereby gain more profit when its cost uncertainty increases or the competing chain's cost uncertainty decreases. The chain with a low or sufficiently low belief-degree cost gains a competitive advantage on both quantity and profit. A chain's competitiveness can be enhanced by either decreasing its confidence level or increasing its rival's confidence level. Furthermore, we demonstrate that supply chain integration is the dominant strategy for given confidence levels. Nevertheless, a prisoner's dilemma occurs when the differences in the belief-degree costs of the two supply chains are not significant and the competitive intensity is high. In addition, the magnitudes of the confidence levels can be changed to avoid or cause a prisoner's dilemma. Finally, under different confidence levels, the Stackelberg model for competing hybrid or decentralized supply chains is extended to the bargaining model, and the impact of bargaining power on supply chain competition is analyzed.

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Section: Literature Reviewmentioning

confidence: 99%

Impact of cost uncertainty on supply chain competition under different confidence levels

Liu

Zhou

Chen

et al. 2018

Int Trans Operational Res

View full text Add to dashboard Cite

show abstract

“…Xue et al (2016) study supply chain coordination with a markdown policy, and show that anticipated conspicuous consumption can benefit the supply chain, while conspicuous consumption can aggravate the double marginalization. Cai et al (2015) show that, with the basic wholesale-price contract, suppliers can specify a threshold for retailers' quantity ordered to coordinate the supply chain perfectly. We develop and use the phrase ''pricing power'' to refer to the ability of an agent in the supply chain to control the retail commission rate or wholesale price, and to coordinate the channel.…”

Section: Literature Reviewmentioning

confidence: 99%

A comparison of the merchant and agency models in the hotel industry

Liao

2017

Int Trans Operational Res

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In addition to a hotel's direct sales channel, the hotel can choose whether to use the online travel agency (OTA) channel, and run a dual‐channel distribution system. For the hotel, selling rooms through OTA expands the available market, but comes at some expense, such as fewer allocated rooms for its own direct channel. In this paper, we formulate a theoretical game model to analyze the impact of various parameters on the channel and pricing decisions. We also compare the impact of form of contract, where the contract between hotel and OTA can be based on either the merchant or agency model. We show the impact of capacity on the hotel's channel choice. In the dual‐channel system, we find that the OTA prefers the agency model over the merchant model when the hotel's capacity is small. We also propose a revenue‐sharing contract that can achieve channel coordination for both hotel and OTA retailers under both models.

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“…Such contracts are commonly used by Chinese manufacturers for seasonal products such as moon cakes, fashion apparel, and toys (Cai et al. ). We consider contracts of the form A = wq , where w is the unit wholesale price and A is the total payment for the advance purchase quantity, q .…”

Section: Structure Of the Best Coordinating Contractmentioning

confidence: 99%

Designing Supply Contracts Considering Profit Targets and Risk

Deng

Yano

2016

Production and Operations Management

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M anagers at all stages of a supply chain are concerned about meeting profit targets. We study contract design for a buyer-supplier supply chain, with each party maximizing expected profit subject to a chance constraint on meeting his respective profit target. We derive the optimal contract form (across all contract types) with randomized and deterministic payments. The best contract has the property that, if the chance constraints are binding, at most one party fails to satisfy his profit target for any given demand realization. This implies that "least risk sharing,"that is, minimizing the probability of outcomes for which both parties fail to achieve their profit targets, is optimal, contrary to the usual expectations of "risk sharing." We show that an optimal contract can possess only two of the following three properties simultaneously: (i) supply chain coordination, (ii) truth-telling, and (iii) non-randomized payments. We discuss methods to mitigate the consequent implementation challenges. We also derive the optimal contract form when chance constraints are incorporated into several simpler and easier-to-implement contracts. From a numerical study, we find that an incremental returns contract (in which the marginal rebate rate depends on the return quantity) performs quite well across a relatively broad range of conditions.

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Supply chain coordination based on return contracts with a threshold ordering quantity

Cited by 10 publications

References 32 publications

Impact of cost uncertainty on supply chain competition under different confidence levels

Impact of cost uncertainty on supply chain competition under different confidence levels

A comparison of the merchant and agency models in the hotel industry

Designing Supply Contracts Considering Profit Targets and Risk

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