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Three-Level Supply Chain Coordination under Disruptions Based on Revenue-Sharing Contract with Price Dependent Demand

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  • Qinghua Pang
  • Yuer Chen
  • Yulu Hu

Abstract

Considering the market demand is stochastic and dependent on price, this paper shows that the revenue-sharing contract could coordinate a three-level supply chain consisting of one manufacturer, one distributor, and one retailer under normal environment. However, the original revenue-sharing contract cannot coordinate the supply chain under disruptions in circumstances of certain incidents leading to significant changes in market demand and causing additional deviation costs. To solve the problem, this essay introduces two improved forms of revenue-sharing contract: a mixed contract form based on a quantity discount policy and a pure form, which are characterized by antidisruption ability. The model of improved revenue-sharing contract is optimized when the market demand is in the additive form or in the multiplicative form with price dependent demand. Formulas are given to calculate the optimal contract parameters. Finally, this essay demonstrates the accuracy of the model of improved revenue-sharing contract with the help of numerical examples.

Suggested Citation

  • Qinghua Pang & Yuer Chen & Yulu Hu, 2014. "Three-Level Supply Chain Coordination under Disruptions Based on Revenue-Sharing Contract with Price Dependent Demand," Discrete Dynamics in Nature and Society, Hindawi, vol. 2014, pages 1-11, December.
    • Handle: RePEc:hin:jnddns:464612
    DOI: 10.1155/2014/464612
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    Cited by:

    1. Yan Shi & Fulin Wang & Ying Wang & Lili Jia, 2023. "The Maize Supply Chain Coordination Mechanism under Yield Uncertainty Caused by Drought: A Study in the Heilongjiang Province of China," Sustainability, MDPI, vol. 15(14), pages 1-17, July.
    2. Ma, Xueli & Wang, Jian & Bai, Qingguo & Wang, Shuyun, 2020. "Optimization of a three-echelon cold chain considering freshness-keeping efforts under cap-and-trade regulation in Industry 4.0," International Journal of Production Economics, Elsevier, vol. 220(C).

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