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Contracting under uncertain capacity

Author

Listed:
  • Zied Jemai

    (LGI - Laboratoire Génie Industriel - EA 2606 - CentraleSupélec)

  • Nesim K Erkip
  • Yves Dallery

    (LGI - Laboratoire Génie Industriel - EA 2606 - CentraleSupélec)

Abstract

In this paper, we develop a two-stage supply-chain in which a supplier with uncertain capacity sells to a retailer facing a Newsvendor problem. We analyze the centralized system where both partners take their decisions to optimize the expected system profit and the decentralized system where they make decisions individually. We show that, in a framework of Stackelberg equilibrium, the decentralized model is less efficient than the centralized model and we propose a buy-back contract that coordinates the system.

Suggested Citation

  • Zied Jemai & Nesim K Erkip & Yves Dallery, 2006. "Contracting under uncertain capacity," Post-Print hal-01672452, HAL.
    • Handle: RePEc:hal:journl:hal-01672452
    as

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    Cited by:

    1. Baruah, Pundarikaksha, 2006. "Supply Chains Facing Atypical Demand: Optimal Operational Policies And Benefits Under Information Sharing," MPRA Paper 16101, University Library of Munich, Germany.

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