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Competition and cooperation in a single-retailer two-supplier supply chain with supply disruption

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  • Li, Jian
  • Wang, Shouyang
  • Cheng, T.C.E.

Abstract

Many retailers diversify their supply disruption risk by sourcing from multiple suppliers. While a retailer's sourcing strategy impacts the profit of the supply chain, the pricing strategies of suppliers influence all aspects of the supply chain. In this paper we investigate the sourcing strategy of a retailer and the pricing strategies of two suppliers in a supply chain under an environment of supply disruption. We characterize the sourcing strategies of the retailer in a centralized and a decentralized system. We derive a sufficient condition for the existence of an equilibrium price in the decentralized system when the suppliers are competitive. Based on the assumption of a uniform demand distribution, we obtain an explicit form of the solutions when the suppliers are competitive. Finally we devise a coordination mechanism to maximize the profits of both suppliers.

Suggested Citation

  • Li, Jian & Wang, Shouyang & Cheng, T.C.E., 2010. "Competition and cooperation in a single-retailer two-supplier supply chain with supply disruption," International Journal of Production Economics, Elsevier, vol. 124(1), pages 137-150, March.
    • Handle: RePEc:eee:proeco:v:124:y:2010:i:1:p:137-150
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    References listed on IDEAS

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