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

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

Tiaojun Xiao, Jia Luo, Jiao Jin
Copyright: © 2009 |Volume: 2 |Issue: 1 |Pages: 15
ISSN: 1935-5726|EISSN: 1935-5734|ISSN: 1935-5726|EISBN13: 9781615203338|EISSN: 1935-5734|DOI: 10.4018/jisscm.2009010101
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MLA

Xiao, Tiaojun, et al. "Coordination of a Supply Chain with Demand Stimulation and Random Demand Disruption." IJISSCM vol.2, no.1 2009: pp.1-15. http://doi.org/10.4018/jisscm.2009010101

APA

Xiao, T., Luo, J., & Jin, J. (2009). Coordination of a Supply Chain with Demand Stimulation and Random Demand Disruption. International Journal of Information Systems and Supply Chain Management (IJISSCM), 2(1), 1-15. http://doi.org/10.4018/jisscm.2009010101

Chicago

Xiao, Tiaojun, Jia Luo, and Jiao Jin. "Coordination of a Supply Chain with Demand Stimulation and Random Demand Disruption," International Journal of Information Systems and Supply Chain Management (IJISSCM) 2, no.1: 1-15. http://doi.org/10.4018/jisscm.2009010101

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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.

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