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Coordination of a Supply Chain with Demand Stimulation and Random Demand Disruption

Author

Listed:
  • Tiaojun Xiao

    (Nanjing University, China)

  • Jia Luo

    (Nanjing University, China)

  • Jiao Jin

    (Nanjing University, China)

Abstract

This article develops a dynamic game model of a supply chain consisting of one manufacturer and one retailer to study the coordination mechanism and the effect of demand disruption on the coordination mechanism, where the market demand is sensitive to retail price and service. We assume that the supplier and the retailer only know the distribution of the disrupted amount after the demand disruption and they share the quantity deviation costs. We find that an all-unit wholesale quantity discount-subsidy mechanism can coordinate the supply chain. We give the coordination mechanism of the supply chain after the demand disruption and find that the demand disruption remarkably influences the price-service level decisions of the centralized supply chain and the coordination mechanism of the decentralized supply chain. In particular, the expected quantity differs from the planned quantity although the penalty costs prevent from this deviation.

Suggested Citation

  • Tiaojun Xiao & Jia Luo & Jiao Jin, 2009. "Coordination of a Supply Chain with Demand Stimulation and Random Demand Disruption," International Journal of Information Systems and Supply Chain Management (IJISSCM), IGI Global, vol. 2(1), pages 1-15, January.
    • Handle: RePEc:igg:jisscm:v:2:y:2009:i:1:p:1-15
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    Cited by:

    1. Jie Wu & Zhixin Chen & Xiang Ji, 2020. "Sustainable trade promotion decisions under demand disruption in manufacturer-retailer supply chains," Annals of Operations Research, Springer, vol. 290(1), pages 115-143, July.
    2. Weihua Liu & Xinran Shen & Di Wang & Donglei Zhu, 2023. "Service quality guarantee design: obedience behavior, demand updating and information asymmetry," Annals of Operations Research, Springer, vol. 329(1), pages 157-189, October.
    3. Linda Zhang & Gang D.U. & Jun W.U. & Yujie M.A., 2020. "Joint production planning, pricing and retailer selection with emission control based on Stackelberg game and nested genetic algorithm," Post-Print hal-03276837, HAL.
    4. Asian, Sobhan & Wang, Jian & Dickson, Geoff, 2020. "Trade disruptions, behavioral biases, and social influences: Can luxury sporting goods supply chains be immunized?," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 143(C).
    5. Pegah Bahrani & Alireza Arshadi Khamseh, 2020. "Competitive Environment Between Green and Non-green Products Considering Disruption and Alliance Strategy," Global Journal of Flexible Systems Management, Springer;Global Institute of Flexible Systems Management, vol. 21(2), pages 135-161, June.
    6. Lei Yang & Meng Chen & Yiji Cai & Sang-Bing Tsai, 2018. "Manufacturer’s Decision as Consumers’ Low-Carbon Preference Grows," Sustainability, MDPI, vol. 10(4), pages 1-26, April.
    7. Chakraborty, Abhishek & Mandal, Prasenjit, 2021. "Channel efficiency and retailer tier dominance in a supply chain with a common manufacturer," European Journal of Operational Research, Elsevier, vol. 294(1), pages 100-121.
    8. Xiaoyan Xu & Suresh P. Sethi & Sai‐Ho Chung & Tsan‐Ming Choi, 2023. "Reforming global supply chain management under pandemics: The GREAT‐3Rs framework," Production and Operations Management, Production and Operations Management Society, vol. 32(2), pages 524-546, February.
    9. Xu, Qingyun & He, Yi & Shao, Zhen, 2023. "Retailer's ordering decisions with consumer panic buying under unexpected events," International Journal of Production Economics, Elsevier, vol. 266(C).
    10. Can Ding & Li Liu & Yi Zheng & Jianxiu Liao & Wenxing Huang, 2022. "Role of Distribution Centers Disruptions in New Retail Supply Chain: An Analysis Experiment," Sustainability, MDPI, vol. 14(11), pages 1-17, May.
    11. Zhuo, Xiaopo & Wang, Fan & Niu, Baozhuang, 2021. "Brand-owners’ vertical and horizontal alliance strategies facing dominant retailers: Effect of demand substitutability and complementarity," Omega, Elsevier, vol. 103(C).
    12. Delgado, Felipe & Mora, Julio, 2021. "A matheuristic approach to the air-cargo recovery problem under demand disruption," Journal of Air Transport Management, Elsevier, vol. 90(C).
    13. Eugene Furman & Alex Cressman & Saeha Shin & Alexey Kuznetsov & Fahad Razak & Amol Verma & Adam Diamant, 2021. "Prediction of personal protective equipment use in hospitals during COVID-19," Health Care Management Science, Springer, vol. 24(2), pages 439-453, June.
    14. Syed Asif Raza, 2022. "A bibliometric analysis of pricing models in supply chain," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 21(2), pages 228-251, April.
    15. Malin Song & Sai Yuan & Hongguang Bo & Jinbo Song & Xiongfeng Pan & Kairui Jin, 2024. "Robust optimization model of anti-epidemic supply chain under technological innovation: learning from COVID-19," Annals of Operations Research, Springer, vol. 335(3), pages 1331-1361, April.
    16. Cao, Kaiying & Guo, Qiang & Xu, Yuqiu, 2023. "Information sharing and carbon reduction strategies with extreme weather in the platform economy," International Journal of Production Economics, Elsevier, vol. 255(C).
    17. Alibeiki, Hedayat & Li, Shanling & Vaidyanathan, Ramnath, 2020. "Market dominance or product cost advantage: Retail power impacts on assortment decisions," International Journal of Production Economics, Elsevier, vol. 222(C).
    18. Zhao, Yujie & Zhou, Hong & Leus, Roel, 2022. "Recovery from demand disruption: Two-stage financing strategy for a capital-constrained supply chain under uncertainty," European Journal of Operational Research, Elsevier, vol. 303(2), pages 699-718.
    19. Lui, Ariel K.H. & Lo, Chris K.Y. & Ngai, Eric W.T. & Yeung, Andy C.L., 2023. "A tough pill to swallow? The lessons learned from mandatory RFID adoption," International Journal of Production Economics, Elsevier, vol. 258(C).
    20. Liang, Guitian & Gu, Chaocheng, 2021. "The value of target sales rebate contracts in a supply chain with downstream competition," International Journal of Production Economics, Elsevier, vol. 242(C).
    21. Mohammad Alamgir Hossain & Md. Maruf Hossan Chowdhury & Ilias O. Pappas & Bhimaraya Metri & Laurie Hughes & Yogesh K. Dwivedi, 2023. "Fake news on Facebook and their impact on supply chain disruption during COVID-19," Annals of Operations Research, Springer, vol. 327(2), pages 683-711, August.
    22. Bodendorf, Frank & Sauter, Maximilian & Franke, Jörg, 2023. "A mixed methods approach to analyze and predict supply disruptions by combining causal inference and deep learning," International Journal of Production Economics, Elsevier, vol. 256(C).
    23. Parast, Mahour Mellat, 2020. "The impact of R&D investment on mitigating supply chain disruptions: Empirical evidence from U.S. firms," International Journal of Production Economics, Elsevier, vol. 227(C).
    24. Wu, Xiangxiang & Zha, Yong & Ling, Liuyi & Yu, Yugang, 2022. "Competing OEMs’ responses to a developer's services installation and strategic update of platform quality," European Journal of Operational Research, Elsevier, vol. 297(2), pages 545-559.
    25. Chuan Zhao & Luyao Li & Hongxia Sun & Hongji Yang, 2021. "Multi-Scenario Evolutionary Game of Rumor-Affected Enterprises under Demand Disruption," Sustainability, MDPI, vol. 13(1), pages 1-26, January.

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