Differential Game Analyses of Logistics Service Supply Chain Coordination by Cost Sharing Contract

Abstract

Cooperation of all the members in a supply chain plays an important role in logistics service. The service integrator can encourage cooperation from service suppliers by sharing their cost during the service, which we assume can increase the sales by accumulating the reputation of the supply chain. A differential game model is established with the logistics service supply chain that consists of one service integrator and one supplier. And we derive the optimal solutions of the Nash equilibrium without cost sharing contract and the Stackelberg equilibrium with the integrator as the leader who partially shares the cost of the efforts of the supplier. The results make the benefits of the cost sharing contract in increasing the profits of both players as well as the whole supply chain explicit, which means that the cost sharing contract is an effective coordination mechanism in the long-term relationship of the members in a logistics service supply chain.

Channels Coordination Game Model Based on Result Fairness Preference and Reciprocal Fairness Preference: A Behavior Game Forecasting and Analysis Method

“…Currently academics have focused on designing some mechanisms or contracts to achieve channel coordination of the manufacturers and retailers such as quantity discount mechanism [3], two-part tariff mechanism [4][5][6], three-part tariff mechanism [4], and other some complexly contract mechanisms [7][8][9][10]. Although these mechanisms could theoretically achieve the channel coordination, it was difficult to apply these mechanisms to practice.…”

Channel Coordination in Logistics Service Supply Chain considering Fairness

“…In the LSSC, the conflict and competition widely exist in the cooperation of logistics service capacities since the LSI and the FLSP are independent economic entities [11]. Therefore, channel coordination issue of the LSSC has increasingly caught the attentions in supply chain studies [4,11].…”

“…In the LSSC, the conflict and competition widely exist in the cooperation of logistics service capacities since the LSI and the FLSP are independent economic entities [11]. Therefore, channel coordination issue of the LSSC has increasingly caught the attentions in supply chain studies [4,11]. The objective of channel coordination is to reduce the negative effects of conflict and demand uncertainty and eventually improve the performance of the supply chain [12][13][14].…”

“…Two streams of the literature are most closely related to the research issue we are concerned with. The first stream focuses on the channel coordination issue of the LSSC (see [4,11,25]). For example, Liu et al [4] investigate how to determine the fairest revenue-sharing coefficient for the revenue-sharing contract in the LSSC under stochastic demand.…”

“…For example, Liu et al [4] investigate how to determine the fairest revenue-sharing coefficient for the revenue-sharing contract in the LSSC under stochastic demand. By modeling a Stackelberg differential game, Zhao et al [11] show that the cost sharing contract is an effective coordination mechanism in a LSSC. The second stream investigates the role of fairness concerns in the traditional supply chain (see [15-18, 24, 26, 27]).…”