How to Coordinate a Two-Echelon Supply Chain under O2O Business Model When Retailer Faces Disruptions

Abstract

Abstract.A two-echelon supply chain under O2O business model, a new kind of supply chain, is studied in this paper, in which it is composed of one supplier (she) and one O2O retailer (he). The supplier finds that demand disruption and retailer's sales cost disruption happen simultaneously after her production plan is formulated. How to maximize the total supply chain profit in the centralized and the decentralized decisions is analyzed, which is a new problem compared with the previous studies. The results obtained are as follows. The supplier needs to adjust the retail price if the disruptions satisfy a given condition. If the disruptions satisfy other conditions, the supplier needs to adjust both the retail price and the production quantity. In the decentralized decision, an improved revenue-sharing contract, a new supply contract, can coordinate the disrupted supply chain. Finally, some numerical examples are given to show the results.