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Supply chain coordination with competing suppliers under price-sensitive stochastic demand

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  • Wang, Feng
  • Diabat, Ali
  • Wu, Lunwen

Abstract

In this paper, we investigate a supply chain where two competing suppliers sell substitutable products through a common retailer who faces price-dependent stochastic demand. The retailer jointly decides the order quantity and the retail price for each product. Unlike most existing research assuming customer homogeneity, we divide the customers into two types: i) the price-sensitive type and ii) the brand-loyalty type, and investigate the issues of supply chain coordination. Our results show that neither buy-back contracts nor the buy-back related hybrid contracts (i.e., the hybrid buy-back and revenue-sharing contract and the hybrid buy-back and sales rebate contract) can achieve the coordination of such a supply chain. Furthermore, under buy-back contracts for the decentralized supply chain, we analyze the retailer's optimal retail price and order quantity when each supplier imposes a minimum order-quantity constraint. Our result shows that there exists a unique optimal decision for the retailer under some mild restrictions.

Suggested Citation

  • Wang, Feng & Diabat, Ali & Wu, Lunwen, 2021. "Supply chain coordination with competing suppliers under price-sensitive stochastic demand," International Journal of Production Economics, Elsevier, vol. 234(C).
    • Handle: RePEc:eee:proeco:v:234:y:2021:i:c:s0925527320303698
    DOI: 10.1016/j.ijpe.2020.108020
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    Cited by:

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    2. Dehghan-Bonari, Mohamad & Heydari, Jafar, 2022. "How a novel option contract helps a green product to enter a traditional product's retailing channel: A mathematical modeling approach," Journal of Retailing and Consumer Services, Elsevier, vol. 69(C).
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    5. 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.
    6. Nematollahi, Mohammadreza & Tajbakhsh, Alireza & Mosadegh Sedghy, Bahareh, 2021. "The reflection of competition and coordination on organic agribusiness supply chains," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 154(C).
    7. Feng Li & Han Wu & Qingyuan Zhu & Liang Liang & Gang Kou, 2021. "Data envelopment analysis cross efficiency evaluation with reciprocal behaviors," Annals of Operations Research, Springer, vol. 302(1), pages 173-210, July.
    8. Bo Yan & Yanping Liu & Zijie Jin, 2023. "Joint coordination contract for capital‐constrained supply chains under asymmetric information," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(1), pages 251-270, January.
    9. Lu, Qihui & Liao, Changhua & Chen, Meilan & Shi, Victor & Hu, Xiangling & Hu, Weiwei, 2024. "Platform financing or bank financing in agricultural supply chains: The impact of platform digital empowerment," European Journal of Operational Research, Elsevier, vol. 315(3), pages 952-964.
    10. Yang, Yang & Liu, Jie, 2023. "Price timing and financing strategies for a capital-constrained supply chain with price-dependent stochastic demand," International Journal of Production Economics, Elsevier, vol. 261(C).

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