An Investigation To Operational Decision-making And Coordination For A Supply Chain Under Consignment Mode

This paper focuses on two problems: channel performance optimization andsupply chain coordination under consignment mode.About channel performance optimization, three models associated withcentralized decision-making, total decentralized decision-making and partiallydecentralized decision-making under consignment contracts with revenue-sharingwere formulated, respectively. We shed light on the effect of suppliers’ competition tothe optimal decisions and revenue equilibriums of those three models. It is found thatthe chain-wide profit under the centralized decision-making is always greater than thatin other two models. Without intensive competition, suppliers’ joint action can justonly improve the suppliers’ profits but ruin the retailer’s and even chain-wide profits;however, with intensive competition, suppliers’ joint action can increase not only thesuppliers’ profits but also the retailer’s as well as chain-wide’s. A sensitivity analysisof supply chain revenue for pure and cross demand-price elasticity is also conducted.About supply chain coordination, a side-payment contract was proposed tocoordinate supply chain profits under consignment mode. A centralizeddecision-making and a decentralized decision-making model under consignment pricecontract were formulated, respectively. Furthermore, a comparison of the equilibriumresults of the two models was given. Side-payment was introduced to coordinate thesupply chain profits loss under decentralized decision-making model. We usedRubinstein bargain model to solve the side-payment parameter, resolving someliteratures that not considering the rationality and fairness of allocation of profitsincrease. It is found that consignment price contract with side-payment can fullycoordinate the supply chain.