Coordination in a Single-Retailer Two-Supplier Supply Chain under Random Demand and Random Supply with Disruption. (24th February 2013)

• Record Type: Journal Article
• Authors: Hu, Fei; Lim, Cheng-Chew; Lu, Zudi; Sun, Xiaochen
• Other Names: Li Xiang Academic Editor.
• Is Part Of: Discrete dynamics in nature and society. Volume 2013(2013)
• Publication Date: 2013-02-24
• Subjects: System analysis -- Periodicals; Dynamics -- Periodicals; Chaotic behavior in systems -- Periodicals; Differentiable dynamical systems -- Periodicals; 003.05
• DOI: 10.1155/2013/484062
• Languages: English
• ISSNs: 1026-0226

Abstract

Abstract : This paper studies the coordination issue of a supply chain consisting of one retailer and two suppliers, a main supplier and a backup supplier. The main supplier's yield is subject to disruption and the retailer faces a random demand. We determine the retailer's optimal ordering policy and the main supplier's production quantity that maximize expected profit of the centralized supply chain. We also analyze the decentralized scenario, and a combination of overproduction risk sharing and buy-back contracts with a side payment from/to the backup supplier is provided to coordinate the supply chain. Numerical examples are given to gain some qualitative insights.