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Price competition, cost and demand disruptions and coordination of a supply chain with one manufacturer and two competing retailers **.
- Article from:
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Omega
- Article date:
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October 1, 2008
- Author:
- Xiao, Tiaojun; Qi, Xiangtong
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Copyright informationCOPYRIGHT 2008 Adams Business Media. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
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This paper studies the coordination of a supply chain with one manufacturer and two competing retailers after the production cost of the manufacturer was disrupted. We consider two coordination mechanisms: an all-unit quantity discount and an incremental quantity discount. For each mechanism, we develop the conditions under which the supply chain is coordinated and discuss how the cost disruption may affect the coordination mechanisms. For the all-unit quantity discount scheme, we find that the manufacturer charges the lower-cost retailer for a lower unit wholesale price in order to induce him to order more products. If the costs of two retailers have a remarkable difference, then the ...
<[[??].sup.*.sub.2]. Thus, we can set the breakpoints [[??].sup.*.sub.1] = [[??].sup.*.sub.1] and [[??].sup.*.sub.2] = [[??].sup.*.sub.2]. From (8), we have [[??].sup.*.sub.1] - [[??].sup.*.sub.2] = 1/2 d([c.sub.1] - [c.sub.2])><[q.sup.*.sub.2] and [[??].sup.*.sub.1]><1 and [[??].sup.*.sub.1]><[[??].sup.2.sub.2]. It is obvious that [q.sup.**] [less than or equal to] [[??].sup.*.sub.1] if [c.sub.1] - [c.sub.2] [less than or equal to] 2[d.sup.2], [[??].sup.*.sub.1]/[(1 + d)(2 - d)] (for short Case (a)) and [q.sup.**]>
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