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Supply chain coordination contracts with inventory level and retail price dependent demand

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  • Saha, S.
  • Goyal, S.K.

Abstract

In this paper three unlike coordinating contracts namely (i) joint rebate contract (ii) wholesale price discount contract and (iii) cost sharing contract are proposed for two echelon supply chain coordination perspective under stock and price induced demand. It is found analytically that the manufacturer׳s and the retailer׳s preferences among three contractual forms are not always aligned. By applying bargaining theory, it is established that stock elasticity plays an important role to select coordination contract and a threshold value stock elasticity is also determined, below which cost sharing contract is not feasible. It is also found that the retailer with higher bargaining power always prefers wholesale price discount contract among considered three contracts. Results are illustrated analytically as well as numerically.

Suggested Citation

  • Saha, S. & Goyal, S.K., 2015. "Supply chain coordination contracts with inventory level and retail price dependent demand," International Journal of Production Economics, Elsevier, vol. 161(C), pages 140-152.
    • Handle: RePEc:eee:proeco:v:161:y:2015:i:c:p:140-152
    DOI: 10.1016/j.ijpe.2014.12.025
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    8. Díaz, Ronald David Suárez & Paternina-Arboleda, Carlos D. & Martínez-Flores, José Luis & Jimenez-Barros, Miguel A., 2020. "Economic order quantity for perishables with decreasing willingness to purchase during their life cycle," Operations Research Perspectives, Elsevier, vol. 7(C).
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    23. Hosseini-Motlagh, Seyyed-Mahdi & Govindan, Kannan & Nematollahi, Mohammadreza & Jokar, Abbas, 2019. "An adjustable bi-level wholesale price contract for coordinating a supply chain under scenario-based stochastic demand," International Journal of Production Economics, Elsevier, vol. 214(C), pages 175-195.

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