The Optimal Decisions Under The Demand Uncertainty Of Supply Chain Coordination With Contracts

The demand of market is the power of the whole supply chain from the perspective of operations management. Demand uncertainty has a greater influence on the operational decisions of the supply chain members. To address the demand uncertainty in a supply chain, this thesis focuses on three major issues:two different models of demand randomness, the different structures of two-echelon supply chain, and the retailer’s different risk profile. The objective is to investigate joint decisions and supply chain coordination with contract for single-period products. The backbone of above operational models is the classical newsvendor model. Moreover, this thesis develops some extensions of newsvendor problem. The main contents of the dissertation are as following:1. Considering the general newsvendor model with lost-sale penalty cost, the optimal solutions for the single-period newsvendor problem with price and inventory as joint decisions are investigated under the price-sensitive stochastic demand. The existence and uniqueness of the joint pricing and ordering decisions are proved respectively under additive demand case and multiplicative demand case. Moreover, the closed-form solutions of the optimal decisions are given. These results are more generalized and may serve as the modeling framework for other related research such as multi-retailer competition and supply chain contract coordination.2. The newsvendor problem is extended to a two-echelon supply chain consisting of a single manufacturer and a single retailer facing stochastic demand that is sensitive to both retail price and sales effort. A combined contract with the constrained returns quantity and sales target rebate, is able to achieve channel coordination and leads to a Pareto improving situation for supply chain members. Further, the supplier can offer the same contract to multi independent retailers, because the optimal parameters of the combined contract are independent of demand distribution. The existence and uniqueness of the optimal sales effort level, pricing and stocking decisions are proved under additive demand case.3. The newsvendor problem with price and inventory as joint decisions is extended to a two-stage supply chain with one manufacturer and two competing retailers. The demand for the product at each retailer during a single selling season is regarded as price-dependent and stochastic. A multiplicative model is used to capture the randomness in the demand, and the expected demand is modeled as an exponential function of both retail prices. If the demand distribution satisfies the property of the increasing failure rate (IFR), it is shown that there uniquely exist optimal decisions and supply chain can be coordinated by revenue-sharing contract.4. Differing from the previous studies that mainly focus on risk-neutral retailers, risk-averse retailers with and without engaged in horizontal price competition are examined, and how their attitudes towards risk and retail competition affect the retailers’and manufacturer’s optimal decisions and the channel efficiency. Each retailer’s risk-embedded objective is characterized via conditional value-at-risk (CVaR). The existence and uniqueness of the joint pricing and ordering decisions of retailers and closed-form solutions can be shown by theoretical derivation based on revenue-sharing contract. Through theoretical and numerical studies, we analyze that the price elasticity of demand, the level of the competition and risk aversion are how to influence the decision-making of supply chain members and channel efficiency. The results indicate that the revenue-sharing contract can’t coordinate this kind of decentralized supply chain perfectly, and retail competition contributes to improve the channel efficiency of the decentralized supply chain, while the retailers’risk-aversion reduces the channel efficiency.