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Coordinating a three-layer supply chain with uncertain demand and random yield

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  • B.C. Giri
  • S. Bardhan
  • T. Maiti

Abstract

The paper considers a three-layer supply chain involving one raw-material supplier, one manufacturer and one retailer. The market demand is assumed to be stochastic and productions at the raw-material supplier and manufacturer are subject to random yield. The centralised model is studied as the benchmark case. The decentralised model is solved and Nash equilibrium solutions are obtained. It is shown that buyback contract fails to coordinate such a supply chain. However, a composite contract framed combining buyback, and sales rebate and penalty contracts is shown to coordinate the supply chain. Numerical examples are provided to illustrate the developed models.

Suggested Citation

  • B.C. Giri & S. Bardhan & T. Maiti, 2016. "Coordinating a three-layer supply chain with uncertain demand and random yield," International Journal of Production Research, Taylor & Francis Journals, vol. 54(8), pages 2499-2518, April.
    • Handle: RePEc:taf:tprsxx:v:54:y:2016:i:8:p:2499-2518
    DOI: 10.1080/00207543.2015.1119324
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