Bargaining Model of ATO Supply Chain Cooperation in Components Replenishment

Considering that ATO (assemble-to-order) supply chain consists of a final product assembler and two component suppliers, who respectively provide one component to the assembler, we propose a bargaining game model between assembler and suppliers to study their profits-sharing policy, i.e., the components sales prices, and the corresponding production and replenishment quantities of these two components. The optimal solution of the model is obtained, and the effect of the bargaining power of the assembler and the suppliers on the optimal solution is analyzed by theoretical and numerical analysis. We found that with the enhancement of the bargaining power of the assembler to one supplier, the component sales price and profit of this supplier reduce, and those of another supplier increase. Simultaneously, the expected profit of the assembler increases if its bargaining power is stronger than the other supplier, otherwise, it decreases.