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Mechanisms of Collaboration in the Hotel Supply Chain: Two-Stage Ordering Contract and Option Contract

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Abstract

This paper considers a hotel supply chain consisting of a hotel and an online travel agent (OTA) for the distribution of a limited number of rooms through both offline and online channels. Under the merchant cooperation assumption, to overcome the disadvantages of the decentralized decision model and demand uncertainty, two collaboration mechanisms, namely a two-stage ordering contract and an option contract, are introduced to increase the profit in the hotel supply chain. This paper investigates the optimal decisions of the hotel and the OTA under different contract models. Moreover, the authors analyze the effect of demand uncertainty and the interaction of demand variability and the hotel’s capacity on the profits of the hotel and the OTA under different models. The results show that both the two-stage ordering contract and the option contract can increase the profits of the entire supply chain and the hotel; however, the profit of the OTA can be increased through the two-stage ordering contract and option contract only when the hotel’s capacity is relatively small and the demand variability is big; otherwise, the two collaboration mechanisms cannot increase the OTA’s profit.

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Authors and Affiliations

  1. School of Business Administration, South China University of Technology, Guangzhou, 510640, China

    Li Zhang & Fei Ye

Authors
  1. Li Zhang
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  2. Fei Ye
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Corresponding author

Correspondence to Fei Ye.

Additional information

This research was supported by the National Natural Science Foundation of China under Grant Nos. 71471066, 71371006, 71090403, Program for New Century Excellent Talents in University (NCET-13-0219), Research Fund for the Doctoral Program of Higher Education of China under Grant No. 20130172110029.

This paper was recommended for publication by Editor LI Jian.

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Zhang, L., Ye, F. Mechanisms of Collaboration in the Hotel Supply Chain: Two-Stage Ordering Contract and Option Contract. J Syst Sci Complex 31, 750–772 (2018). https://doi.org/10.1007/s11424-017-6101-0

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  • DOI: https://doi.org/10.1007/s11424-017-6101-0

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