An adjustable bi-level wholesale price contract for coordinating a supply chain under scenario-based stochastic demand

Seyyed-Mahdi Hosseini-Motlagh, Kannan Govindan, Mohammadreza Nematollahi and Abbas Jokar

International Journal of Production Economics, 2019, vol. 214, issue C, 175-195

Abstract: Recently, significant research attention has been paid to supply chain (SC) coordination. However, previous studies assume that the market demand is deterministic or has a certain probability distribution. Taking a new approach, this paper analytically addresses the coordination of an SC under a scenario-based demand and proposes an adjustable bi-level wholesale price contract. To analyse the coordination problem under a scenario-based demand, we focus on corporate social responsibility (CSR) investment as an important decision in the SC context and consider a three-tier SC (one manufacturer, one distributor, and one retailer) where the retailer faces a scenario-based stochastic CSR-sensitive demand. Considering a manufacturer-Stackelberg game model, the manufacturer as a leader determines the amount of investment in the CSR issues and the retailer as a follower decides on the order quantity by considering possible demand scenarios. First, we propose the decentralized and centralized decision-making models using a scenario-based approach. Afterward, to resolve the channel conflict in each possible demand scenario, an adjustable bi-level wholesale contract is proposed to entice all SC actors to take part in the coordination scheme. Moreover, a profit-sharing plan is developed based on the Nash-bargaining model to fairly share the extra profits among SC actors. Finally, in order to analyse the efficacy of proposed models, a numerical example and a set of sensitivity analyses are carried out. The results indicate that the proposed contract not only coordinates the three-level SC under a scenario-based stochastic demand, but also improves the CSR level in comparison with the decentralized structure.

Keywords: Channel coordination; Three-echelon supply chain; Scenario-based stochastic demand; Corporate social responsibility; Adjustable bi-level wholesale price contract (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0925527319300891
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:proeco:v:214:y:2019:i:c:p:175-195

DOI: 10.1016/j.ijpe.2019.03.003

Access Statistics for this article

International Journal of Production Economics is currently edited by Stefan Minner

More articles in International Journal of Production Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().