Coordinate The Drop-shipping Supply Chain With Price-dependent Stochastic Demand

With the development of the Internet, Drop-shipping is a kind of supply chain model which becomes popular. Different from the traditional supply chain in which retailer holds the inventory, in Drop-shipping, retailer holds no inventory, and focus on the marketing activity like pricing and effort to get the customer acquisition, and the supplier deliver the goods to the end customer directly at retailer's ask. On the one hand, due to eliminate a lot of intermediate process in Drop-shipping, the cost of system is reduced; On the other hand, the function of marketing and operation belongs to different decision maker, they will make the decision strategically, so there is a game process which will decrease the efficient of system. Therefore, the deep research of Drop-shipping will make us apply it to the practice more effective, and it is important for the development of e-commerce of China.In this paper, we study the two-echelon Drop-shipping supply chain under the price-dependent stochastic demand. In chapter three, we analyze three Drop-shipping model under the different power structures (with a powerful retailer, with a powerful supplier, with a retailer and a supplier having equal power), optimal solutions are obtained and compared. We demonstrate how decision power in the Drop-shipping affects decision variables and profit. For example, we found that the supply chain members make more profit in ratailer-leader Drop-shipping than equal power Drop-shipping, and in equal power model, retailer makes the highest retailer price decision, etc. Further, we compare the Drop-shipping model and the traditional model by the detailed numerical analysis. It is found that both supply chain members make more profits in Drop-shipping model for a wide range of parameters. In chapter four, we compare the equal power Drop-shipping model with the integrated supply chain, and found that the system optimal cannot be obtained in Drop-shipping with a wholesale price contract. But through introducing the inventory factor as a decision variable of supplier, we get a new Drop-shipping model which can improve the supply chain performance. In addition, we propose a simple supply chain contract can coordinate the Drop-shipping. We verify all the results by numerical analysis.The meaning of this paper is that considering the pricing effect into a new supply chain model——Drop-shipping, will extend the existing research on Drop-shipping, and provide some guidelines for the manager how to choice and apply this model, also present an thinking of game theory in supply chain.