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Coordination and Decision of Supply Chain Under: Price-Dependent Demand and Customer Balking Behavior

Author

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  • Guangdong Liu

    (Beijing University of Posts and Telecommunications, Beijing, China & Fuyang Normal University, China)

  • Tianjian Yang

    (Beijing University of Posts and Telecommunications, Beijing, China)

  • Yao Wei

    (Fuyang Normal University, Fuyang, China)

  • Xuemei Zhang

    (Fuyang Normal University, Fuyang, China)

Abstract

In order to investigate supply chain coordination and decision under customer balking and stochastic demand, the article considers a two-echelon supply chain consisting of one manufacturer with risk-neutral and one retailer with risk-neutral and develops two models in a centralized and a decentralized system and the three contracts are designed to coordinate supply chain and the optimal price and customer balking strategies are obtained. The results show that the revenue and cost-sharing contract can coordinate supply chain under customer balking and price-dependent demand and achieve the Pareto-improvement; the expected sales quantity and expected reduced sales quantity are influenced conversely by the threshold of inventory and probability of a sale under customer balking. In addition, numerical analysis is given to verify the effectiveness of revenue and cost-sharing contract and the paper gives some managerial insights and puts forward to the future work at last.

Suggested Citation

  • Guangdong Liu & Tianjian Yang & Yao Wei & Xuemei Zhang, 2019. "Coordination and Decision of Supply Chain Under: Price-Dependent Demand and Customer Balking Behavior," International Journal of Information Systems and Supply Chain Management (IJISSCM), IGI Global, vol. 12(3), pages 1-26, July.
    • Handle: RePEc:igg:jisscm:v:12:y:2019:i:3:p:1-26
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    References listed on IDEAS

    as
    1. Terry A. Taylor, 2002. "Supply Chain Coordination Under Channel Rebates with Sales Effort Effects," Management Science, INFORMS, vol. 48(8), pages 992-1007, August.
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