The Research On Coordination And Ripple Effect Of The Supply Chain With One Supplier And Multiple Retailers Based On Demand Disruption

With technological development and economic globalization, the competition between enterprises has changed into the competition between supply chains. Supply chain coordination has become one main research interests about supply chain management. At the same time, we are in high-speed change, very uncertain dynamic environment. The uncertainty makes the coordination of the supply chain more complex. Disturbance of these incidents will not only affect one supply chain node, and this effect will be passed in the chain, which is called the risk of ripple effect, it may give other companies a huge impact on the node.This paper develops two coordination models of a supply chain consisting of one manufacturer, one dominant retailer and multiple fringe retailers to investigate how to coordinate the supply chain after demand disruption. We assume the dominant retailer act as monopolist who has strong market power and market share, also the dominant retailer is the price leader and decides whether to promote. Once the retail price is settled down, all fringe retailers regard it as the market retail price. The basic supply chain can be seen as dominated by the producer Stan Walberg game.This paper adopted a linear quantity discount contract and special wholesale price contracts to coordinate the supply chain. Under the linear quantity discount schedule, we study the stable supply chain coordination and calculate the contract parameters. After the occurrence of demand disturbances, the whole supply chain order quantity, retail price, profit and so are subject to change. So the contract parameters must be adjusted accordingly. Among them, the discount rate, the subsidy rate parameter has a very strong stability, only adjusting the maximum wholesale price parameters. Under special wholesale price contracts schedule, when demand increases the dominant retailer can obtain the greater proportion of the supply chain profits; when demand decreases severely. The dominant retailer’s profit ratio depends not only on changes in demand, but also on punishment cost. Finally, the analysis and comparison of the linear quantity discounts contract and special wholesale price contract. Also is divided into the two cases, a stable supply chain and supply chain after demand disturbance. The study found the production cost plays a very important role in selecting the contract mode in a stable supply chain. Also, we analyzed the comparison of the two contract profits after demand disruption. Then, bring the ripple effect of supply chain into our analysis and calculate the size of ripple effect through comparing profits of manufacturers and retailers before and after demand disturbance. The simulation can reflect the transfer situation with demand disruption in the supply chain.The conclusions can be derived that the manufacturer (retailer) favorable choice in stable market situation may not be able to achieve the optimal profit when demand changes or other external conditions. Therefore, if the members of supply chain want to get a favorable contract options, they also need concern and forecast the uncertainties in the supply chain.The paper enriched the dynamic supply chain coordination problems to some extent and provided some theoretical basis for policy-makers to respond to disturbance events in supply chain coordination.