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Analysis of Asymmetric Quantity Commitment in Decentralized Supply Chains

Author

Listed:
  • Zhaoqiong Qin

    (Savannah State University, USA)

  • Wen-Chyuan Chiang

    (University of Tulsa, USA)

  • Robert Russell

    (University of Tulsa, USA)

Abstract

Quantity commitment chosen by firms in competition has been demonstrated by previous studies to mitigate price competition. This study demonstrates that asymmetric quantity commitment can always arise when one firm (e-tailer) shortens lead times or adopts just-in-time systems to circumvent quantity commitment while another firm (retailer) does not. To study the asymmetric quantity commitment in decentralization, a multi-stage game is analyzed, and backward induction is adopted. The authors find that the retailer always adopts the quantity commitment in the decentralization to achieve a higher profit.

Suggested Citation

  • Zhaoqiong Qin & Wen-Chyuan Chiang & Robert Russell, 2021. "Analysis of Asymmetric Quantity Commitment in Decentralized Supply Chains," International Journal of Operations Research and Information Systems (IJORIS), IGI Global Scientific Publishing, vol. 12(2), pages 83-102, April.
    • Handle: RePEc:igg:joris0:v:12:y:2021:i:2:p:83-102
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    References listed on IDEAS

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    1. Wei-yu Kevin Chiang & Dilip Chhajed & James D. Hess, 2003. "Direct Marketing, Indirect Profits: A Strategic Analysis of Dual-Channel Supply-Chain Design," Management Science, INFORMS, vol. 49(1), pages 1-20, January.
    2. Liang Guo & Ganesh Iyer, 2013. "Multilateral Bargaining and Downstream Competition," Marketing Science, INFORMS, vol. 32(3), pages 411-430, May.
    3. Dan Kovenock & Raymond Deneckere & Tom Faith & Beth Allen, 2000. "Capacity precommitment as a barrier to entry: A Bertrand-Edgeworth approach," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 15(3), pages 501-530.
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