Abstract
This paper considers a multiple-supplier, single manufacturer assembly supply chain where the suppliers produce components of a short life-cycle product which is assembled by the manufacturer. In this single-period problem the suppliers determine their production quantities and the manufacturer chooses the retail price. We assume that the manufacturer faces a random price-dependent demand in either additive or multiplicative form. For each case, we analyze both simultaneous-move and leader-follower games to respectively determine the Nash and Stackelberg equilibria, and find the globally-optimal solution that maximizes the system-wide expected profit. Then, we introduce appropriate buy-back and lost-sales cost-sharing contracts to coordinate this assembly supply chain, so that when all the suppliers and the manufacturer adopt their equilibrium solutions, the system-wide expected profit is maximized.
Original language | English |
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Pages (from-to) | 96-104 |
Number of pages | 9 |
Journal | European Journal of Operational Research |
Volume | 204 |
Issue number | 1 |
DOIs | |
Publication status | Published - 1 Jul 2010 |
Funding
Research supported by the Research and Postgraduate Studies Committee of Lingnan University under Research Project No. DR07B8.Research supported by the Natural Sciences and Engineering Research Council of Canada.
Keywords
- Assembly supply chain
- Buy-back
- Game theory
- Lost-sales cost-sharing