Coordination and Decision of Supply Chain Under: Price-Dependent Demand and Customer Balking Behavior

Guangdong Liu, Tianjian Yang, Yao Wei and Xuemei Zhang
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Guangdong Liu: Beijing University of Posts and Telecommunications, Beijing, China & Fuyang Normal University, China
Tianjian Yang: Beijing University of Posts and Telecommunications, Beijing, China
Yao Wei: Fuyang Normal University, Fuyang, China
Xuemei Zhang: Fuyang Normal University, Fuyang, China

International Journal of Information Systems and Supply Chain Management (IJISSCM), 2019, vol. 12, issue 3, 1-26

Abstract: In order to investigate supply chain coordination and decision under customer balking and stochastic demand, the article considers a two-echelon supply chain consisting of one manufacturer with risk-neutral and one retailer with risk-neutral and develops two models in a centralized and a decentralized system and the three contracts are designed to coordinate supply chain and the optimal price and customer balking strategies are obtained. The results show that the revenue and cost-sharing contract can coordinate supply chain under customer balking and price-dependent demand and achieve the Pareto-improvement; the expected sales quantity and expected reduced sales quantity are influenced conversely by the threshold of inventory and probability of a sale under customer balking. In addition, numerical analysis is given to verify the effectiveness of revenue and cost-sharing contract and the paper gives some managerial insights and puts forward to the future work at last.

Date: 2019
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