Coordinating a Supply Chain Consisted of One Supplier and One Retailer When Demand Disruption Happens

Abstract

In this paper, a supply chain consisted of one supplier and one retailer is studied. The retailer sells product to customers by using e-commerce platform and customers receive the product offline. Distributing product is outsourced by the retailer. The supply chain is coordinated under the revenue-sharing contract in static case. The supplier observes that the market scale changes after the production plan in the supply chain is formulated. In centralized supply chain, the supplier only needs to adjust the retail price if the change of the market scale is in certain range. The supplier needs to adjust the retail price and the production quantities if the change is large enough. In decentralized decision, the supply chain cannot be coordinated. This means that the original revenue-sharing contract cannot coordinate the disrupted supply chain. An improved revenue-sharing contract is put forward to coordinate the disrupted supply chain. The research shows that the improved contract can coordinate the original supply chain and the disrupted supply chain, which means that the contract has robustness when facing the market scale disruption. Finally, some numerical examples are also given.