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Coordinating a decentralized supply chain with capacity cost compensation.
- Source :
- RAIRO: Operations Research (2804-7303); 2021 Supplement, Vol. 55, pS1789-S1802, 14p
- Publication Year :
- 2021
-
Abstract
- Capacity planning, as a vital asset, is a challenge problem for firms in various industries, such as organic agriculture, apparels and high-tech industry. However, many manufacturers are conservative about their capacity investment for a variety of reasons. As a result, many retailers have the motivation to stimulate manufacturers to enhance the capacity level. In this paper, we propose a revenue sharing and capacity cost compensation contract to help the retailer stimulate her manufacturer to increase the capacity level. In the contract, the retailer keeps a portion of sales revenue and compensates for the manufacturer's capacity cost. They face a stochastic demand and play a Stackelberg game where the retailer acts as a leader and the manufacturer acts as a follower. We prove that the channel can be perfectly coordinated through our proposed contract. Moreover, we give a feasible range of profit distribution, in which both channel members can earn no less profit than that in non-cooperation. Meanwhile, comparing with centralized channel with multiplicative demand, we find that capacity in decentralized channel tends to be lower. [ABSTRACT FROM AUTHOR]
Details
- Language :
- English
- ISSN :
- 28047303
- Volume :
- 55
- Database :
- Complementary Index
- Journal :
- RAIRO: Operations Research (2804-7303)
- Publication Type :
- Academic Journal
- Accession number :
- 150719565
- Full Text :
- https://doi.org/10.1051/ro/2020056