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Coordinating a supply chain under demand and cost disruptions

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  • Erbao Cao
  • Xiushuai Zhou
  • Kevin Lϋ

Abstract

In this paper, we investigate the coordination of a supply chain consisting of one manufacturer and n Bertrand competing retailers under disruptions of market demand and production cost. We present a coordination model of a supply chain under normal scenarios. Our findings demonstrate that the coordination scheme designed for the initial production plan should be revised when disruptions of market demand and production cost occur. To resolve this issue, we consider the possible deviation costs caused by disruptions and propose optimal decision models for different disruptions under centralised decision-making. We present an improved revenue-sharing contract model to coordinate the decentralised supply chain under disruptions. The proposed models are then further analysed through numerical examples.

Suggested Citation

  • Erbao Cao & Xiushuai Zhou & Kevin Lϋ, 2015. "Coordinating a supply chain under demand and cost disruptions," International Journal of Production Research, Taylor & Francis Journals, vol. 53(12), pages 3735-3752, June.
    • Handle: RePEc:taf:tprsxx:v:53:y:2015:i:12:p:3735-3752
    DOI: 10.1080/00207543.2014.988885
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