Analysis Of The Effect On Contract Of The Supply Chain Coordination

As consumers demand diversity and competition intensification and other issues arising from the changes in the demand, the supply chain nodes enterprises have no choice but to increase inventory and lead-time approach to the buffer fluctuations in the demand, thereby creating the "bullwhip effect". Meanwhile all enterprises in the supply chain will make decision in their respective effectiveness , thus the whole supply chain profit in decentralized control is less than the profit in centralized control that all decisions made by one policy makers , resulting in "double marginalization".Therefore, there must be have appropriate mechanisms to standardize the behavior of enterprise in supply chain, to ensure all members of supply chain in decentralized control do things to make the biggest profit overall direction, so as to reach the supply chain coordination. Contract is an important way to achieve coordination of the supply chain. This paper analyzed the factors influencing of supply chain coordination: changes in the demand and for and members of supply chain objectives inconsistent. Then this paper analysis the factors which contract includes and these factors' function on resolving the supply chain coordination obstacles. Finally we will focus on using simple common contract -- two-part tariff further develop quantitative analysis of the contract effect on the supply chain coordination.This paper assumes that the supply chain only have one kind of product, determine demand for the two-class supply chain, and that demand is a function of price; vendors first make transfer pricing decisions, and retailers decide retail price decisions and quantity accordingly. Respectively with a single supplier for a single individual retailers and suppliers to a number of retailers to set up a centralized control and decentralized control of the profit model. And proves that the profit of decentralized control charging two-part tariff equals to the profit of concentrate control. Which proves two-part tariff can coordinate the supply chain. Meanwhile tied profit, profit distribution and parameters of two-part tariff were discussed.