Wholesale price versus buyback: A comparison of contracts in a supply chain with a behavioral retailer

Vipin, B.; Amit, R.K.

doi:10.1016/j.cie.2021.107689

Cited by 17 publications

(18 citation statements)

References 49 publications

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“…Various supply contracts have recently been studied in academia to address the double marginalization problems. Buy-back contracts [11][12][13], revenue-sharing contracts [14,15], option contracts [16,17], quantity-flexibility contract [18,19], and consignment contracts [20,21] are among the contracts. Studies on coordinated contracts were reviewed extensively by Cachon and Lariviere [7] and Shen et al [8].…”

Section: Literature Reviewmentioning

confidence: 99%

“…In the coordinated CCS contract, the capacity cost-sharing ratio θ can be substituted with the wholesale price w by using (13). Then, we have the following expression:…”

Section: Capacity Cost-sharing Contract With a Bargaining Powermentioning

confidence: 99%

“…Once the optimal wholesale price w is known, the optimal capacity cost-sharing ratio θ can be obtained from (13). Therefore, only one optimal (w, θ) combination satisfies a given profit-sharing ratio.…”

Section: Capacity Cost-sharing Contract With a Bargaining Powermentioning

confidence: 99%

“…With the wholesale price w, the capacity cost-sharing rate θ is obtained from (13). As previously discussed, the standard deviation of the supplier's profit is proportional to the supply price w, and w and θ are inversely proportional in the optimal (w, θ) combinations.…”

Section: Modified Ccs Contract Algorithm For Risk-averse Suppliersmentioning

confidence: 99%

“…With a specific w value, only one 𝜃 leads to a coordinated solution. For example, in the base-case scenario with w = 8.0, the optimal 𝜃 is 0.25 from (13). Now, let us consider that the CCS contract is adopted in a decentralized environment.…”

Section: Peer Reviewmentioning

confidence: 99%

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A Capacity Cost-Sharing Contract for a Two-Stage Supply Chain with a Risk-Averse Supplier under a Bargaining Power

Koo

2022

Sustainability

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This study considers a two-stage supply chain (SC) consisting of a single supplier and a manufacturer. When the manufacturer introduces a new product to the market, both the manufacturer and supplier should install production capacity in advance. Since capacity building often takes a long time, the demand is uncertain at the time of capacity decision making. The supplier often makes a conservative decision on capacity building to avoid possible capital risks due to excess capacity, which leads to the so-called double marginalization problem. Various risk-sharing supply contracts have recently been studied in academia to overcome the double marginalization problem. However, most existing studies ignore the bargaining power of each SC member and capacity investment. This study aims to fill the research gap by including capacity investment and bargaining power in the supply contract process. A capacity cost-sharing (CCS) contract is introduced in which the manufacturer shares the supplier’s capacity investment risk. We investigate how to set the contract parameters in the CCS contract to coordinate the supply chain. It is found that the wholesale price and manufacturer’s CCS ratio are negatively proportional to each other, and the manufacturer’s expected profit increases as the CCS ratio (wholesale price) increases (decreases) in the coordinated CCS contract. We show that there exists a CCS contract leading to a coordinated supply chain for a specific range of bargaining power. We also present a new CCS contract for a supply chain with a risk-averse supplier. A numerical illustration is provided to clarify how the contract parameters are determined and to examine the effect of the contract parameters on SC performance. Managerial implications and possible future work are discussed.

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Section: Literature Reviewmentioning

confidence: 99%

“…In the coordinated CCS contract, the capacity cost-sharing ratio θ can be substituted with the wholesale price w by using (13). Then, we have the following expression:…”

Section: Capacity Cost-sharing Contract With a Bargaining Powermentioning

confidence: 99%

Section: Capacity Cost-sharing Contract With a Bargaining Powermentioning

confidence: 99%

Section: Modified Ccs Contract Algorithm For Risk-averse Suppliersmentioning

confidence: 99%

Section: Peer Reviewmentioning

confidence: 99%

See 3 more Smart Citations