Research On Quantity Flexibility Contract Model In Responsive Supply Chain

While being a dynamic alliance involving multiple corporations which all have their own behavior purposes, supply chain is also an organization trying to reach a mutual target or pursue the profit maximization during a certain period. In order to reflect the buying pattern between the upstream and downstream members in the supply chain, and to avoid double marginalization, the advent of researches on supply contract has become a necessity.Based on relevant researches, this paper summarizes the fundamental value of supply contract, pointing out that adopting a suitable supply contract could not only increase the overall channel profit, reduce the stocking level and total cost of the supply chain, but it could also realize the channel coordination, share revenues, decentralize risks, and maintain long-term strategic partnerships.Then, the origin, development and significance of a particular type of supply contract, quantity flexibility contract have been discussed in detail.It has been widely accepted that time is one of the most crucial elements to achieve utter advantages in the competition. Making a response to customer needs as quickly as possible is one of the key factors to win customers in furious market competitions. Therefore, it is of a great necessity to combine supply contract and time influence together.Only when the type of supply contract matches the requirements of specific supply chain, can the overall channel performance be enhanced effectively. Therefore, responsive supply chain is adopted as the background to further analyze a quantity flexibility contract model with time influence. This model has great practical importance and management insights since it can increase overall channel profits, realize Pareto improvement and therefore coordinate the whole supply chain. An arithmetical example is also provided to validate the conclusions.