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Supply chain coordination in the presence of uncertain yield and demand

Author

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  • Lei Xie
  • Junhai Ma
  • Mark Goh

Abstract

This paper focuses on a two-echelon supply chain consisting of a seller and a buyer. Considering the case where the buyer faces uncertain demand and yield, the paper investigates the buyback contract for the supply chain and studies how the yield uncertainty and the relative bargaining power affect the performance of buyback contract. The results suggest that when the seller's bargaining power is relatively high and can control the uncertain yield, the buyback contract is sufficient to coordinate the supply chain. Conversely, when the seller's bargaining power is relatively low or cannot guarantee yield stability, the buyback contract does not work. To coordinate such a supply chain, a combined contract named Buy-Back-Revenue-Sharing contract is proposed. Furthermore, this paper presents the optimal orders to maximize the profits of the buyer and the whole supply chain and it finds that if the seller cannot control the yield, the buyer will place fewer orders and both parties will gain lower profit with supply chain coordination.

Suggested Citation

  • Lei Xie & Junhai Ma & Mark Goh, 2021. "Supply chain coordination in the presence of uncertain yield and demand," International Journal of Production Research, Taylor & Francis Journals, vol. 59(14), pages 4342-4358, July.
    • Handle: RePEc:taf:tprsxx:v:59:y:2021:i:14:p:4342-4358
    DOI: 10.1080/00207543.2020.1762942
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    Citations

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    Cited by:

    1. Sarkar, P. & Wahab, M.I.M. & Fang, L., 2023. "Weather rebate contracts for different risk attitudes of supply chain members," European Journal of Operational Research, Elsevier, vol. 311(1), pages 139-153.
    2. Tianwen Chen & Changqing Liu & Xiang Xu, 2022. "Coordination of Perishable Product Supply Chains with a Joint Contract under Yield and Demand Uncertainty," Sustainability, MDPI, vol. 14(19), pages 1-20, October.
    3. Ma, Jun & Nault, Barrie R. & Tu, Yiliu (Paul), 2023. "Customer segmentation, pricing, and lead time decisions: A stochastic-user-equilibrium perspective," International Journal of Production Economics, Elsevier, vol. 264(C).
    4. Wenxue Ran & Yajing Chen, 2023. "Fresh Produce Supply Chain Coordination Based on Freshness Preservation Strategy," Sustainability, MDPI, vol. 15(10), pages 1-24, May.
    5. Bingbing Cao & Tianhui You & Chunyi Liu & Jian Zhao, 2021. "Pricing and Channel Coordination in Online-to-Offline Supply Chain Considering Corporate Environmental Responsibility and Lateral Inventory Transshipment," Mathematics, MDPI, vol. 9(20), pages 1-30, October.
    6. Wang, Moran & Guo, Xiaolong & Wang, Shouyang, 2022. "Financial hedging in two-stage sustainable commodity supply chains," European Journal of Operational Research, Elsevier, vol. 303(2), pages 803-818.
    7. Zhu, Xiaoliang & Guo, Zixue & Yang, Guoqing, 2023. "Credit coguarantee loan buyback contracts: Equilibrium and coordination strategies," International Journal of Production Economics, Elsevier, vol. 262(C).
    8. Niu, Baozhuang & Shen, Zifan & Xie, Fengfeng & Liu, Yaoqi & Xu, Xin, 2022. "Real-time payment in cross-border operations considering local competition and tax-planning," International Journal of Production Economics, Elsevier, vol. 245(C).
    9. Qingwei Wang & Meimei Zheng & Wei Weng, 2023. "Sourcing decisions with loss aversion under yield and demand randomness," OR Spectrum: Quantitative Approaches in Management, Springer;Gesellschaft für Operations Research e.V., vol. 45(2), pages 661-710, June.
    10. Zhu, Xiaoyan & Cao, Yunzhi & Wu, Jinwei & Liu, He & Bei, Xiaoqiang, 2022. "Optimum operational schedule and accounts receivable financing in a production supply chain considering hierarchical industrial status and uncertain yield," European Journal of Operational Research, Elsevier, vol. 302(3), pages 1142-1154.
    11. Hao Liu & Haodong Chen & Hengyi Zhang & Haibin Liu & Xingwang Yu & Shiqing Zhang, 2022. "Contract Design of Logistics Service Supply Chain Based on Smart Transformation," Sustainability, MDPI, vol. 14(10), pages 1-17, May.

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