Incentive Contract Design In Supply Chain From The Manufacturer's Perspective

As across enterprise organization, supply chain consists of multiple different interest subjects. Interest inconsistency between these different subjects yields the issue of how to motivate and coordinate the different members of supply chain to efficiently cooperate. Further, information asymmetry adds difficulty to the settlement of the issue of supply chain coordination. From the manufacturer's perspective, the issue of how to design incentive contract to motivate the supplier and the retailer to efficiently cooperate with the manufacturer are discussed using theoretical research and comparative study. The main works in the paper are presented as follows.(1) For the issue of the supplier's quality incentive contract design, considering fixed-transfer mechanism, incentive scheme and punishment mechanism, the supplier's quality incentive model with the merged multiple mechanisms is proposed. The results show the optimal incentive contract concludes the above three mechanisms and the matching relationship among the three mechanisms are as follows. High fixed-transfer matches with high punishment and low bonus; low transfer matches with low punishment and high bonus.(2) For the problem of the supplier's quality and punctual delivery incentive contract design, considering fixed-transfer mechanism, incentive scheme and punishment mechanism, the coalition incentive model for improving quality and punctual delivery is established. Then the solution of the model and the optimal contract are studied. The results show the optimal contract is also the combination of the above three mechanisms. Further, the influence of the substitutable relationship between the rate of quality and on-time delivery (OTD) on the optimal contract is explained.(3) For the problem of how to motivate the supplier to disclose cost information, using revelation principle, information discrimination model is created and the solution leads to the self-enforcing contract menu. The contract menu designed appropriately can motivate the supplier to share his true cost information and realize information discrimination, which offer the manufacturer decision theory and decision support to control purchasing cost and increase profits. In addition, design theory of contract menu is given in the paper. Further, theory analysis and numerical simulation are conducted to verify the validity of the contract menu.(4) For the issue of motivating the retailer to improve service level on different hypothesis of risk preference, the unite incentive model based on linear sharing contract under four different risk preference combination is proposed. The results indicate that the retailer's degree of risk aversion is higher, the manufacturer's profits is lower. Therefore, it is very important for the manufacturer to investigate the retailer's degree of risk aversion when selecting cooperative partner in supply chain.(5) For the issue of motivating the retailer to improve service level with external competition, the incentive model based on linear sharing contract is proposed and the solution leads to the optimal incentive contract. The results show that the external competitive pressure is also a driving force to improve the retailer's service level. In addition, competition between the retailers weakens the impacts of asymmetric information on the manufacturers'profits. The manufacturers can make appropriate use of competition to decrease their losses due to asymmetric information.(6) For the issue of motivating the retailer to improve service level and share true market demand information, the joint incentive model based on linear sharing contract is proposed and the solution leads to the optimal incentive contract menu. The results show the optimal contract menu designed properly under double objective incentive environment can realize the above two objectives at the same time. Further, design theory and the algorithms of the model are discussed under double objects incentive condition.Decision theory, decision model and the algorithms are offered for the manufacturer to promote cooperation with the supplier and the retailer through the study of the paper.