Contracting for Competitive Supply Chains under Network Externalities and Demand Uncertainty

Based on network externalities and demand uncertainty environment, supply chain competition model is built; we identify the valid mechanism for the alternative range of profit-sharing contracts and also analyze the effect of product substitutability coefficient and network externalities on the alliance and profit-sharing contract. The results show that the vertical alliance contributes profit improvement to both the manufacturer and the retailer when the impact of network externalities on the product substitutability is not strong. However, vertical alliance will be out of operation when the effect of network externalities on the product substitutability is strong

Asymmetric Information Mitigation in Supply Chain: A Systematic Literature Review

With the level of competition and consumer demand is changing rapidly, the speed and accuracy of the information flow in the supply chain increasingly necessary. Sharing of information between the parties in a supply chain plays an important role in improving the sustainability of a business, but imperfection information is inevitable because each party in the supply chain has a different objective. This condition increases the importance of a research on the mitigation of asymmetric information in the supply chain, therefore the purpose of this study was to conduct a review of previous studies related to overcoming the asymmetric information and map research trend on mitigating asymmetric information in the supply chain. We used systematic literature review (SLR) methods to analyze the data collected from Web of Science and Scopus database from 2005 to 2016. The results of this study can be used as a guide and a reference for further research related to overcoming the asymmetry of information in the supply chain in every industrial sector

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

Strategic and Tactical Design of Competing Decentralized Supply Chain Networks with Risk-Averse Participants for Markets with Uncertain Demand

An integrated equilibrium model for tactical decisions in network design is developed. We consider a decentralized supply chain network operating in markets under uncertain demands when there is a rival decentralized chain. The primary assumption is that two chains provide partial substitutable products to the markets, and markets' demands are affected by tactical decisions such as price, service level, and advertising expenditure. Each chain consists of one risk-averse manufacturer and a set of risk-averse retailers. The strategic decisions are frequently taking precedence over tactical ones. Therefore, we first find equilibrium of tactical decisions for each possible scenario of supply chain network. Afterwards, we find optimal distribution network of the new supply chain by the scenario evaluation method. Numerical example, including sensitivity analysis will illustrate how the conservative behaviors of chains' members affect expected demand, profit, and utility of each distribution scenario

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

Mechanism Design of Fashion Virtual Enterprise under Monitoring Strategy

published_or_final_versio

Quantitative and Qualitative Models for Managing Risk Interdependencies in Supply Chain

The interdependent nature of supply chain elements and events requires risk systems must be assessed as an interrelated framework to optimize their management and integrate effectively with other decision-making tools in uncertain environments. This research shows a synthesis and analysis of the main qualitative/quantitative methods that have been used in the literature considering the treatment of event dependencies in supply chain risk management in the period 2003– 2018. The results revealed that the integration with disruption analysis tools and artificial intelligence methods are the most common types adopted, with increasing trend and effectiveness of Bayesian and fuzzy theory approache

Using risk sharing contracts for supply chain risk mitigation: A buyer-supplier power and dependence perspective

The paper aims to understand buyer-supplier power and dependence scenarios following a risk sharing contract. The study develops a supply chain risk sharing contract to mitigate demand uncertainty and price volatility related risks in a globalised business environment. An integer programming model is developed and analysed following an automotive case study to generate insights into buyer-supplier relationships. Multiple buyer-supplier power and dependence scenarios are considered to reflect the possible leverages involved in the decision-making. The situational strength evaluated through buyer-supplier power and dependence illuminates the inherent complexity in contract negotiation. Thus there is an evident need to develop risk sharing contracts for mitigating global risks. The developed relationship framework and risk sharing contract model are expected to help SC managers in better understanding behavioural aspects during contract negotiations. The risk sharing contract model proposed here also contributes to a potentially novel perspective on existing theory in buyer-supplier power and dependence by providing a relational perspective on the dynamics of supply chain design and collaboration

The role of contracts in industrial organisation theory

The thesis comprises three chapters and an introduction. Chapter 1 extends the basic Principal-Agent model by allowing the principal to investigate the agent after the latter has chosen his action. The threat of investigation can be used by the principal as an incentive-scheme. As is well known, this scheme is most effective when the punishment imposed on an agent who is found shirking is as large as possible. It is shown, however, that there will be limits to the optimal size of penalties if the principal makes inspection-errors and if he cannot precommit himself to a given inspection-strategy. Furthermore, if one of these two assumptions is not verified then the principle of maximum deterrence may still apply. Chapter 2 addresses the question of whether an incumbent seller who faces a threat of entry into his market does prevent entry by signing long-term contracts with his customers. The related question of the optimal length of contracts between the incumbent and his clients is also considered. It is shown that such contracts do prevent entry to some extent but that they never completely preclude it. Furthermore, it is established that such contracts are socially inefficient. Finally, when the seller possesses superior information about the likelihood of entry, it is shown that optimal contracts may be of finite length, since the length of the contract may act as a signal of the likelihood of entry. Chapter 3 deals with vertical restraints in manufacturer-retailer contractual relations. The case of a manufacturer who sells a homogeneous good to retailers who compete in prices and "post-sales" services, is considered. It is shown that simple forms of vertical restraints, such as resale-price-maintenance and franchise-fees, dominate the optimal linear-price contract but are dominated by vertical integration. The analysis is concluded with the description of an optimal contract