The Research Of Retailer-Leading Two-Stage Supply Chain Contract

The theoretical and academic research on the supply chain has never stopted since the emergence of the concept of supply chain. The studies included the tactical decision-making (such as inventory decision-making, transportation decision-making, decision-making information and so on) and the strategic decision-making (such as the coordination of supply chain, the risk of supply chain). In recent years, because of the strengthening of the system concept and the development of computer technology, combined with the understanding of "double marginalization" in the supply chain, the scholars have gradually shifted their attention to the direction of how to coordinate the supply chain, that is, the entire supply chain achieve the Pareto optimal state.Supply chain involves the existence of several decision makers pursuing different objectives, possibly conflicting among each other. In fact, a behavior that is locally rational could be globally inefficient. Coordination mechanisms are then necessary so as to have local decision makers pursue channel coordination. Nowadays people of management field become more and more interested in the study of supply chain contract. Supply chain contract can ensure the coordination of the bargainers and optimize the performance of channel through providing appropriate information and incentive measures. The design of supply chain contract is mostly to solve two problems that affect the efficiency of the intire supply chain. The first is double marginalization resulted in pursuing the best profits of the supply chain numbers. The second is bullwhip effect resulted in information asymmetry. Pasternack first proposed the concept of supply chain contract and proposed the optimal pricing and return policies for perishable commodites.Through studying the literatures of supply chain contracts, we found that at present most of the literatures are based on the premise that the enterprises on the upstream of the supply chain have first-mover advantages or dominance, and the downstream enterprises have subordinate or passive positions. However, with the personalized and diversity needs of customers, the time of production of consumer decide and suppliers dominate retailers has gone forever. In the real world, we tend to see that suppliers are dominated by large-scale retailers, such as Wal-Mart, Carrefour and other large supermarkets. The research of how to coordinate the entire supply chain by using supply chain contracts when the retailers have the dominate right is still very small. Based on this idea, the retailer-leading two-stage supply chain contract models are studied in our paper.First of all, we analyse a two-stage supply chain composed of a supplier and a retailer. The dominant retailer is the price leader and forerunner, and the supplier is the price follower. Under asymmetric information, we discussed the balanced solutions of centralized decision-making and independent decision-making, and through the comparative analysis of the two, we found that under centralized decision-making, consumers can buy more products at lower prices. And the entire supply chain can get more revenue under centralized decision-making than under independent decision-making. That is to say, the centralized decision-making is superior than the independent decision-making. In order to help the enterprises to improve efficiency of supply chain, we design effective supply chain contracts on the basis of economics thesis and stackelberg game theory. The specific job are as follows:1. We design two revenue sharing contract models in retailer-leading two-stage supply chain under different demand structure constraints. Through model analysis, we draw the following conclusions: Whether in additive or multiplicative demand function, the dominant retailer will be able to force the supplier to obtain revenue that he just accept the contract. And the retailer cam maximize his own revenue when the entire supply chain also achieve maximum revenue. That is, the revenue sharing contract models we studied can coordinate the retailer-leading two-stage supply chain. We also carry out model simulation on the multiplicative demand function. 2. We design two option contract models in retailer-leading two-stage supply chain under different demand structure constraints. Through model analysis, we draw the following conclusions: Whether in additive or multiplicative demand function, the dominant retailer will be able to force the supplier to obtain revenue that he just accept the contract. And the retailer cam maximize his own revenue when the entire supply chain also achieve maximum revenue. That is, the option contract models we studied can coordinate the retailer-leading two-stage supply chain. We also obtain three conditions under which the supply chain system can obtian coordination: The first condition is that the implementation price and the option price the retailer announced must be negatively correlated; the second condition is that the option price must be placed at a certain range; the third condition is that the retailer's initial order quantity can't be more than the optimal production quantity in centralized supply chain. We also carry out model simulation on the additive demand function.