Supply chain coordination using revenue sharing contract with price discount and stochastic demand dependent on time and price

Fatemeh Zabihi and Morteza Khakzar Bafruei

International Journal of Integrated Supply Management, 2016, vol. 10, issue 2, 132-150

Abstract: This paper studies the coordination of two-echelon supply chains using stochastic demand that is dependent on retail price and time. Due to fewer tendencies of costumers to buy products, which are approaching their expiry date, price discount is an attractive mechanism to encourage consumers to purchase these products as considered in this paper. We develop models for objective functions of supply chain members. These models lead to the determination of the retail price and discount time. To coordinate supply chain, revenue sharing contract is also considered. Uniform distribution is used for stochastic part of demand and the situation is considered in which shortage cost is lower than surplus cost. Numerical example was solved to illustrate the model performance.

Keywords: pricing; revenue sharing contracts; stochastic demand; supply chain coordination; price discounting; time dependent demand; price dependent demand; supply chain management; SCM; two-echelon supply chains; retail prices; modelling; discount time. (search for similar items in EconPapers)
Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:ids:ijisma:v:10:y:2016:i:2:p:132-150

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