Contract strategies in competitive supply chains subject to inventory inaccuracy

Feng Tao, Yanhong Xie, Yao-Yu Wang (), Fujun Lai and Kin Keung Lai
Additional contact information
Feng Tao: East China University of Science and Technology
Yanhong Xie: East China University of Science and Technology
Yao-Yu Wang: Soochow University
Fujun Lai: University of Southern Mississippi
Kin Keung Lai: Shenzhen University

Annals of Operations Research, 2022, vol. 309, issue 2, No 8, 661 pages

Abstract: Abstract We use a newsvendor model to investigate equilibrium contracting strategies and their impact on the members in two competing supply chains that are subject to inventory inaccuracy. The suppliers are Stackelberg leaders and can choose either a wholesale-price contract or consignment contract. As a result, we analyze three cases: the wholesale price contract case, consignment contract case, and hybrid contract case. We first analytically derive the optimal outcomes of each case and then analyze the equilibrium behaviors of suppliers and retailers under both symmetric and asymmetric settings. Our results show that the consignment contract is no longer the dominant strategy for dominant suppliers when inventory inaccuracy is considered, even though it is considered as the channel-coordinating contract format in the traditional supply chain. Specifically, in the symmetric case, the wholesale price contract is the equilibrium contracting strategy when inventory inaccuracy is below a certain threshold. In the asymmetric case, the hybrid scenario occurs when the high-cost supplier chooses the wholesale price contract, and the low-cost supplier chooses the consignment contract when inventory inaccuracy is less than a certain value. Furthermore, our results demonstrate that the threshold point of inventory inaccuracy is interrelated with the channel cost-sharing rate and level of chain-to-chain competition between supply chains.

Keywords: Inventory inaccuracy; Equilibrium contracting; Supply chain management; Game theory (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://link.springer.com/10.1007/s10479-021-03969-6 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

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:spr:annopr:v:309:y:2022:i:2:d:10.1007_s10479-021-03969-6

Ordering information: This journal article can be ordered from
http://www.springer.com/journal/10479

DOI: 10.1007/s10479-021-03969-6

Access Statistics for this article

Annals of Operations Research is currently edited by Endre Boros

More articles in Annals of Operations Research from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().