Coordination of Decentralized Supply Chains: A Literature Review

Due to the fact that the double margin exists in the decentralized supply chain, many papers focus on the coordination of decentralized supply chain. In this paper, we classify these papers into three parts according to the structure of supply chain. The first kind of supply chain consists of one upstream supplier and one downstream retailer. The second one consists of multiple suppliers and a single retailer. The last one refers to the supply chain with multiple suppliers and a single retailer. This paper can enable readers to get the knowledge of existing research on supply chain coordination. We also give some interesting future research concerning this topic

Buy Now and Price Later: Supply Contracts with Time-Consistent Mean-Variance Financial Hedging

We consider a two-stage supply chain comprising one risk-neutral manufacturer (he) and one risk-averse retailer (she), where the manufacturer procures consumption commodities in spot market as major inputs for production and sells the final products to the retailer. The retailer then sells the final products to the market at a stochastic clearance price. We investigate a flexible price contract that allows the manufacturer to determine the product wholesale price, and the retailer to determine the order quantity, based on the future spot price of consumption commodities. Compared with the simple wholesale price contract, a win-win situation can be achieved under the flexible price contract when the manufacturer's postponed processing cost is lower than a threshold. However, under this flexible price contract the retailer may suffer from the commodity price volatility, even if she does not procure the commodities directly. We further investigate how the risk-averse retailer conducts mean-variance financial hedging by purchasing consumption commodity futures contracts. We formulate the problem using a dynamic programming model and derive a closed-form time-consistent financial hedging policy. Through numerical experiments, we show that the commodity price risk from the manufacturer to the retailer is effectively mitigated with the hedging, and the benefits of the flexible price contract are maintained

Optimal Decisions of a Supply Chain with Two Risk-Averse and Competing Retailers under Random Demand

This paper investigates the optimal decisions in a decentralized supply chain consisting of one manufacturer and two competing retailers who face price-sensitive and stochastic demand. The retailers are risk averse with conditional value at risk (CVaR) as their risk measure, and the manufacturer is a risk-neutral agent. We construct manufacturer-Stackelberg games with retailers, who engage in horizontal price competition. For the multiplicative demand model and expected demand as an exponential function of both prices, we show that there exists the optimal pricing-ordering joint decision uniquely. We then explore the influence of the price sensitivity, risk aversion, and retail competition on optimal decisions and channel efficiency. The results show that retail competition contributes to manufacturer and improves channel efficiency of the decentralized supply chain. When the retailers are more risk averse, the channel efficiency becomes much lower. However, the level of retailers’ risk aversion has no significant impact on the manufacturer’s optimal wholesale price and retailer’s optimal selling price

Risk Decision for Dual-Channel Supply Chain of Agricultural Products Under Disturbance

This paper presents a decision analysis model for the dual-channel supply chain of agricultural products under the disturbance of emergency. Mean variance analysis tool and utility function risk tool are used to describe risk indicators in supply chain. In this study, retailer plays a leading role in agricultural supply chain. By means of the Kuhn-Tucker condition of the retailer’s maximum utility, the optimal price and optimal demand are obtained. The study also shows that risk averse retailer has higher wholesale price, lower retail price and greater supply as well as the demand for the pursuit of greater utility; Supplier has a certain robustness to the sudden event disturbance, when the disturbance is large, the quantity of initial supply quantity will be adjusted. The relationship between the demand change rate of the two channels and the market share of the channel is found. Finally, some numerical examples are presented to illustrate the results. The study provides a possible way of thinking in emergency decision analysis

Study on Buyback Contract in Supply Chain With a Loss-Averse Supplier and Multiple Loss-Averse Retailers Under Stockout Loss Situation

According to the prospect theory and the loss-aversion function, this paper developers the buyback contract model in a two-stage supply chain with a loss-averse supplier and multiple loss-averse retailers. Under the stockout loss setting, we analyze the effect of the loss aversion on the behavior from the retailers and the supplier, and then the buyback contract has been shown to be able to coordinate the supply chain. Furthermore, the number of retailers and loss aversion coefficient meet a certain range, there will be a unique optimal buyback price to achieve supply chain coordination

Method and Approach Mapping of Fair and Balanced Risk and Value-added Distribution in Supply Chains: A Review and Future Agenda

This paper proposes a fair and balanced risk and value-added distribution as a novel approach for collaborative supply chain. The objective of this article is to analyze the existing methods and approaches for risk management, value-adding, risk and revenue sharing to develop a new framework for balancing risk and value-adding in collaborative supply chains. The authors reviewed and synthesized 162 scientific articles which were published between 2001 and 2017 and. The reviewed articles were categorized into supply chain management and performance, risk management, value-added, fair risk and value-added distribution and supply chain negotiation. The potentials identified for future research were the importance of decision-making and sustainability for effectiveness of supply chain risk management. Most previous authors have applied an approach of revenue and risk-- sharing with both decentralized and centralized supply chains to achieve the fair risk and value-added distribution. The dominant methods we found in literature were game theory and complex mathematical formulation. Most literature focused on operation research techniques. We identified a lack of discussion of the intelligent system approach and a potential for future exploration. This paper guide future research and application agenda of fair risk and value-added distribution in supply chain collaboration. We developed a new framework for a fair and balanced risk and value-added distribution model. For a future agenda, we point towards the development of a systematic intelligent system applying soft-computing techniques and knowledge transfer for maintaining sustainable supply chains.Keywords Supply chain collaboration, Fair risk and value-added distribution, Revenue sharing, Risk management, Risk sharin

A rebate scheme that can improve the performance of a supply chain with weather-sensitive demand.

Zhu Jing.Thesis (M.Phil.)--Chinese University of Hong Kong, 2006.Includes bibliographical references (leaves 54-58).Abstracts in English and Chinese.Chapter 1 --- Introduction --- p.1Chapter 2 --- Literature Review --- p.6Chapter 2.1 --- Supply Chain Contracts --- p.6Chapter 2.2 --- Risk Aversion --- p.10Chapter 3 --- Rebate Scheme in a Risk-Neutral Supply Chain --- p.12Chapter 3.1 --- Market Demand is Perfectly Correlated with Temperature --- p.13Chapter 3.1.1 --- The Integrated Supply Chain: the Benchmark --- p.13Chapter 3.1.2 --- The Decentralized Supply Chain --- p.14Chapter 3.1.3 --- Supply Chain Coordination with a Rebate --- p.15Chapter 3.2 --- Market Demand is Partially Correlated with Temperature --- p.18Chapter 3.2.1 --- Additive Random Variable --- p.18Chapter 3.2.2 --- Multiplicative Random Variable --- p.21Chapter 3.3 --- Discussion and Conclusion --- p.22Chapter 4 --- Rebate Scheme in a Risk-Averse Supply Chain --- p.24Chapter 4.1 --- Case of Perfectly Correlated Demand --- p.26Chapter 4.1.1 --- Without a Shortage Cost --- p.26Chapter 4.1.2 --- Shortage Cost s > 0 --- p.32Chapter 4.2 --- Case of Demand with an Additive Random Variable --- p.33Chapter 4.3 --- Discussion and Conclusion --- p.37Chapter 5 --- Numerical Analysis --- p.38Chapter 5.1 --- Risk-Neutral Supply Chain --- p.39Chapter 5.1.1 --- Perfectly Correlated Demand Model --- p.39Chapter 5.1.2 --- Partially Correlated Demand Model --- p.39Chapter 5.2 --- Risk-Averse Supply Chain --- p.45Chapter 5.3 --- Brief Summary --- p.47Chapter 6 --- Conclusion --- p.49Chapter A --- Matlab Source Code --- p.51Bibliography --- p.5

Coordination of Supply Chain with One Supplier and Two Competing Risk-Averse Retailers under an Option Contract

This paper studies an option contract for coordinating a supply chain comprising one risk-neutral supplier and two risk-averse retailers engaged in promotion competition in the selling season. For a given option contract, in decentralized case, each risk-averse retailer decides the optimal order quantity and the promotion policy by maximizing the conditional value-at-risk of profit. Based on the retailers’ decision, the supplier derives the optimal production policy by maximizing expected profit. In centralized case, the optimal decision of the supply chain system is obtained. Based on the decentralized and centralized decision, we find the coordination conditions of the supply chain system, which can optimize the supply chain system profit and make the profits of the supply chain members achieve Pareto optimum. As for the subchain, we also find the coordination conditions, which generalize the results of the supply chain with one supplier and one retailer. Our analysis and numerical experiments show that there exists a unique Nash equilibrium between two retailers, and the optimal order quantity of each retailer increases (decreases) with its own (competitor’s) promotion level