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Procurement strategies and coordination mechanism of the supply chain with one manufacturer and multiple suppliers

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  • Chen, Kebing

Abstract

This paper investigates the coordination mechanism for supply chain with one manufacturer and multiple competing suppliers in the electronic market. We first study two conventional price-only policies, including wholesale price policy and catalog policy, based on the reverse Vickrey auction, and show that both the buyer and the powerful suppliers (with production cost less than a special threshold value) prefer catalog policy to wholesale price policy, and the powerless suppliers prefer wholesale price policy to catalog policy. Simultaneously, neither policy can coordinate the channel composed of the manufacturer and the winning supplier. We also show that a quantity discount policy cannot coordinate the supply chain with competing suppliers unless a kind of restriction is imposed. The aim of the paper is to explore a coordination mechanism, i.e., the price-restricted quantity-discount policy. Pareto analysis indicates that the manufacturer and the winning supplier will realize the ‘win-win’ situation, and the channel can also be coordinated. A key managerial implication of our study is that additional restrictive condition may be necessary to eliminate system inefficiency. Some numerical examples are also given to illustrate management insights.

Suggested Citation

  • Chen, Kebing, 2012. "Procurement strategies and coordination mechanism of the supply chain with one manufacturer and multiple suppliers," International Journal of Production Economics, Elsevier, vol. 138(1), pages 125-135.
  • Handle: RePEc:eee:proeco:v:138:y:2012:i:1:p:125-135
    DOI: 10.1016/j.ijpe.2012.03.009
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    Cited by:

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    2. Mohammaditabar, Davood & Ghodsypour, Seyed Hassan & Hafezalkotob, Ashkan, 2016. "A game theoretic analysis in capacity-constrained supplier-selection and cooperation by considering the total supply chain inventory costs," International Journal of Production Economics, Elsevier, vol. 181(PA), pages 87-97.
    3. Ming Zhang & Jianjun Zhu & Hehua Wang & Pei Liu, 2019. "Evolutionary Game Analysis on Strategies in “Main Manufacturer–Supplier” Mode Considering Technology Docking and Price Concluding under Competition Condition," Mathematics, MDPI, vol. 7(12), pages 1-25, December.
    4. Jafar Heydari, 2015. "Coordinating replenishment decisions in a two-stage supply chain by considering truckload limitation based on delay in payments," International Journal of Systems Science, Taylor & Francis Journals, vol. 46(10), pages 1897-1908, July.
    5. Jifeng Cao & Cheng Ma, 2022. "Procurement Strategies and Auction Mechanism for Heterogeneous Service Providers in a Service Supply Chain," Sustainability, MDPI, vol. 14(15), pages 1-36, July.
    6. Chen, Kebing & Xiao, Tiaojun, 2015. "Outsourcing strategy and production disruption of supply chain with demand and capacity allocation uncertainties," International Journal of Production Economics, Elsevier, vol. 170(PA), pages 243-257.
    7. Araneda-Fuentes, Cristina & Lustosa, Leonardo Junqueira & Minner, Stefan, 2015. "A contract for coordinating capacity decisions in a business-to-business (B2B) supply chain," International Journal of Production Economics, Elsevier, vol. 165(C), pages 158-171.
    8. Kebing Chen & Tiaojun Xiao, 2015. "Production planning and backup sourcing strategy of a buyer-dominant supply chain with random yield and demand," International Journal of Systems Science, Taylor & Francis Journals, vol. 46(15), pages 2799-2817, November.
    9. Zheng, Qi & Zhou, Li & Fan, Tijun & Ieromonachou, Petros, 2019. "Joint procurement and pricing of fresh produce for multiple retailers with a quantity discount contract," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 130(C), pages 16-36.

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