An analysis of supply chain decisions with asymmetrical retailers : effects of disruptions and static service cost on coordination mechanism
RAIRO - Operations Research - Recherche Opérationnelle, Tome 46 (2012) no. 2, pp. 159-187.

The risk of demand or production cost disruption is one of the challenging problems in the supply chain management. This paper explores a generalized supply chain game model incorporating the possible disruptions. We find that a nonlinear Grove wholesale price scheme can fully coordinate such a supply chain even when both market demand and production cost are disrupted. The nonlinear Grove wholesale price scheme has three sides to coordinate the decision behavior of the players. One is that the mechanism can induce the retail pricing decided by the dominant retailer to be equal with that of the channel; the second is that the mechanism can induce fringe retailers to be not priced out of the market; the third is that the mechanism can ensure that the manufacturer uses minimum incentives to induce the dominant retailer to sell its product as well as providing the demand-stimulating service. Disruptions from both demand side and production cost side may also affect the wholesale price, order quantity as well as retail price, and the share of the dominant retailer and the subsidy rate provided by the manufacturer are unity of opposites. We also find that it is optimal for the manufacturer to keep the original production plan when the joint-disruption amount is sufficiently small.

DOI : 10.1051/ro/2012013
Classification : 90B60, 90B50
Mots clés : supply chain management, coordination, disruption management, game theory, robustness
@article{RO_2012__46_2_159_0,
     author = {Chen, Kebing and Yang, Lei and Liu, Yanxia},
     title = {An analysis of supply chain decisions with asymmetrical retailers : effects of disruptions and static service cost on coordination mechanism},
     journal = {RAIRO - Operations Research - Recherche Op\'erationnelle},
     pages = {159--187},
     publisher = {EDP-Sciences},
     volume = {46},
     number = {2},
     year = {2012},
     doi = {10.1051/ro/2012013},
     zbl = {1248.90055},
     language = {en},
     url = {http://archive.numdam.org/articles/10.1051/ro/2012013/}
}
TY  - JOUR
AU  - Chen, Kebing
AU  - Yang, Lei
AU  - Liu, Yanxia
TI  - An analysis of supply chain decisions with asymmetrical retailers : effects of disruptions and static service cost on coordination mechanism
JO  - RAIRO - Operations Research - Recherche Opérationnelle
PY  - 2012
SP  - 159
EP  - 187
VL  - 46
IS  - 2
PB  - EDP-Sciences
UR  - http://archive.numdam.org/articles/10.1051/ro/2012013/
DO  - 10.1051/ro/2012013
LA  - en
ID  - RO_2012__46_2_159_0
ER  - 
%0 Journal Article
%A Chen, Kebing
%A Yang, Lei
%A Liu, Yanxia
%T An analysis of supply chain decisions with asymmetrical retailers : effects of disruptions and static service cost on coordination mechanism
%J RAIRO - Operations Research - Recherche Opérationnelle
%D 2012
%P 159-187
%V 46
%N 2
%I EDP-Sciences
%U http://archive.numdam.org/articles/10.1051/ro/2012013/
%R 10.1051/ro/2012013
%G en
%F RO_2012__46_2_159_0
Chen, Kebing; Yang, Lei; Liu, Yanxia. An analysis of supply chain decisions with asymmetrical retailers : effects of disruptions and static service cost on coordination mechanism. RAIRO - Operations Research - Recherche Opérationnelle, Tome 46 (2012) no. 2, pp. 159-187. doi : 10.1051/ro/2012013. http://archive.numdam.org/articles/10.1051/ro/2012013/

[1] D. Aussadavut, F. Ming, J. Apurva and M. Kamran, A supply chain model with direct and retail channels. Eur. J. Oper. Res. 187 (2008) 691-718. | Zbl

[2] M. Bergen and G. John, Understanding cooperative advertising participation rates in conventional channels. J. Mark. Res. 35 (1997) 357-369.

[3] F. Bernstein and A. Federgruen, Pricing and replenishment strategies in a distribution system with competing retailers. Oper. Res. 51 (2003) 409-426. | Zbl

[4] T. Boyaci and G. Gallego, Coordinating pricing and inventory replenishment policies for one wholesaler and one or more geographically dispersed retailers. Int. J. Prod. Econ. 77 (2002) 95-111.

[5] G.P. Cachon, Supply chain coordination with contracts, in Handbook in operation research and management science : supply chain management, edited by S. Graves and T. de Kok. North-Holland (2003).

[6] G.P. Cachon and M.A. Lariviere, Supply chain coordination with revenue sharing contracts : Strengths and limitations. Manage. Sci. 51 (2005) 30-44. | Zbl

[7] J. Causen, J. Hansen and J. Larsen, Disruption management. OR/MS Today 28 (2001) 40-43.

[8] M. Celikbas, J.G. Shanthikumar and J.M. Swaminathan, Coordinating production quantities and demand forecasts through penalty schemes. IIE Trans. 31 (1999) 851-864.

[9] F. Chen, Coordination mechanisms for a distribution system with one supplier and multiple retailers. Manage. Sci. 47 (2001) 698-708. | Zbl

[10] T.H. Chen, Coordinating the ordering and advertising policies for a single-period commodity in a two-level supply chain. Comput. Ind. Eng. 61 (2011) 1268-1274.

[11] J. Chen and P.C. Bell, Coordinating a decentralized supply chain with customer returns and price-dependent stochastic demand using a buyback policy. Eur. J. Oper. Res. 212 (2011) 293-300. | MR | Zbl

[12] K.B. Chen and T.J. Xiao, Demand disruption and coordination of the supply chain with a dominant retailer. Eur. J. Oper. Res. 197 (2009) 225-234. | MR | Zbl

[13] K.B. Chen and T.J. Xiao, Ordering policy and coordination of a supply chain with two-period demand uncertainty. Eur. J. Oper. Res. 215 (2011) 347-357. | MR | Zbl

[14] P.K. Chintagunta, Investigating the sensitivity of equilibrium profits to advertising dynamics and competitive effects. Manage. Sci. 39 (1993) 1146-1162. | Zbl

[15] J. Clausen, J. Hansen and J. Larsen, Disruption management. OR/MS Today 28 (2001) 40-43.

[16] A.J. Dukes, E. Gal-Or and K. Srinivasan, Channel bargaining with retailer asymmetry. J. Mark. Res. 43 (2006) 84-97.

[17] L.T. Friesz, I. Lee and C.-C. Lin, Competition and disruption in a dynamic urban supply chain. Transp. Res. Part B 45 (2011) 1212-1231.

[18] T. Groves and M. Loeb, Incentives in a divisionalized firm. Manage. Sci. 25 (1979) 221-230. | Zbl

[19] H. Gurnani and Y. Gerchak, Coordination in decentralized assembly systems with uncertain component yields. Eur. J. Oper. Res. 176 (2007) 1559-1576. | MR | Zbl

[20] X. He, A. Prasad and S. Sethi, Cooperative advertising and pricing in a dynamic stochastic supply chain : Feedback Stackelberg strategies. Prod. Oper. Manag. 18 (2009) 78-94.

[21] Z.M. Huang, S.X. Li and V. Mahajan, An analysis of manufacturer-retailer supply chain coordination in cooperative advertising. Decis. Sci. 33 (2002) 469-96.

[22] S. Huang, C. Yang and X. Zhang, Pricing and production decisions in dual-channel supply chains with demand disruptions. Comput. Ind. Eng. 62 (2012) 70-83.

[23] S. Jorgensen, S.P. Sigue and G. Zaccour, Dynamic cooperative advertising in a channel. J. Retail. 76 (2000) 71-92.

[24] S. Karray and G. Zaccour, Could co op advertising be a manufacturer's counterstrategy to store brands? J. Bus. Res. 59 (2006) 1008-1015.

[25] S. Karray and G. Zaccour, Effectiveness of coop advertising programs in competitive distribution channels. International Game Theory Review 9 (2007) 151-167. | MR | Zbl

[26] P.R. Kleindorfer, J.C. Belke, M.R. Elliot, K. Lee, R.A. Lowe and H. Feldman, accident epidemiology and the U.S. chemical industry : accident history and worst-case data from RMP*Info. Risk Anal. 23 (2003) 865-881.

[27] M.A. Lariviere, Supply chain contracting and coordination with stochastic demand, in Quantitative models for supply chain management, edited by S. Tayur, R. Ganeshan and M. Magazine. Kluwer Academic Publishers, Boston, MA (1999) 233-268. | Zbl

[28] A.H.L. Lau, H.S. Lau and J.C. Wang, How a dominant retailer might design a purchase contract for a newsvendor-type product with price-sensitive demand. Eur. J. Oper. Res. 190 (2008) 443-458. | Zbl

[29] Y. Li, X.J. Xu and F. Ye, Supply chain coordination model with controllable lead time and service level constraint. Comput. Ind. Eng. 61 (2011) 858-864.

[30] R.Y. Lin and L.Z. Kong, The impact of channel power of symmetric competing channels on the profit segmentation, in Processing of National Conference of Chinese National Academy (2002).

[31] M. Maier, How to Beat Wal-Mart, in Business, 2.0 (2005).

[32] X.T. Qi, J. Bard and G. Yu, Supply chain coordination with demand disruptions. Omega 32 (2004) 301-312.

[33] J. Raju and S.J. Zhang, Channel coordination in the presence of a dominant retailer. Mark. Sci. 24 (2005) 254-262.

[34] M.H. Riordan, Anticompetitive vertical integration by a dominant firm. Amer. Econom. Rev. 88 (1998) 1232-1248.

[35] L

[36] M. Seyed Esfahani, M. Biazaran and M. Gharakhani, A game theoretic approach to coordinate pricing and vertical co op advertising in manufacturer-retailer supply chains. Eur. J. Oper. Res. 211 (2011) 263-273. | MR | Zbl

[37] W. Shepherd, The economics of industrial organization. Prentice Hall, Upper Saddle River, NJ (1997) 62-64.

[38] L.V. Snyder, P.M. Scaparra, M.S. Daskin and R.L. Church, Planning for disruptions in supply chain networks, in Tutorials in operations research. INFORMS (2006) 234-257.

[39] J.G. Szmerekovsky and J. Zhang, Pricing and two-tier advertising with one manufacturer and one retailer. Eur. J. Oper. Res. 192 (2009) 904-917. | MR | Zbl

[40] A. Tsay, Risk sensitivity in distribution channel partnerships : Implications for manufacturer return policies. J. Retail. 78 (2002) 147-160.

[41] A. Tsay and N. Agrawal, Channel dynamics under price and service competition. Manuf. Serv. Oper. Manag. 2 (2000) 372-391.

[42] A. Tsay, S. Nahmias and N. Agrawal, Modeling supply chain contracts : a review, in edited by S. Tayur, M. Magazine and R. Ganeshan. Kluwer Academic Publishers Quantitative Models for Supply Chain Management, MA (1998) 197-232. | Zbl

[43] J. Useem, How retelling's superpower-and our biggest most admired company- is changing the rules for corporate America. Fortune (2003) 65.

[44] S. Weinstein, The price is righter. Progressive Grocer 79 (2000) 89-94.

[45] Y.S. Xia, M. Yang, B. Golany, S. Gilbert and G. Yu, Real-time disruption management in a two-stage production and inventory system. IIE Trans. 36 (2004) 111-125.

[46] T.J. Xiao, G. Yu, Z.H. Sheng and Y.S. Xia, Coordination of a supply chain with one-manufacturer and two-retailers under demand promotion and disruption management decisions. Ann. Oper. Res. 135 (2005) 87-109. | MR | Zbl

[47] J.X. Xie and A. Neyret, Co op advertising and pricing models in manufacturer-retailer supply chains. Comput. Ind. Eng. 56 (2009) 1375-1385.

[48] J.X. Xie and J.C. Wei, Coordinating advertising and pricing in a manufacturer-retailer channel. Eur. J. Oper. Res. 197 (2009) 785-791. | MR | Zbl

[49] H. Yu, C. Song and J. Chen, Simulating the supply chain disruption for the coordination supply chain. J. Syst. Sci. Syst. Eng. 16 (2007) 323-335.

[50] X. Zou, S. Pokharel and R. Piplani, Channel coordination in an assembly system facing uncertain demand with synchronized processing time and delivery quantity. Int. J. Prod. Econ. 42 (2004) 4673-4689. | Zbl

Cité par Sources :