Research On The Investment Decisions Of RFID Technology In A Two-level Supply Chain

In the increasingly fierce competition of the market circumstances, the productlife cycle becomes shorter, the fluctuation of market demand becomes greater, theimprovement of the order lead-time and the inventory inaccuracies problem, brings asignificant influence on the supply chain performance. With the progress of technology,radio frequency identification (RFID) technology has become an effective way toimprove inventory inaccuracies problem and compress the order lead-time at the sametime.However, the application of RFID technology brings a huge investment. Supplychain is unable to visually analyze the benefit from the investment of RFID technology.Therefore, the research of the investment decision-making problem of the RFIDtechnology is of great significance.In this paper,a two-level supply chain consists of one single supplier as a leaderand one single retailer as a follower was studied, in the condition of the twoimprovement of the order lead-time compression and the inventory inaccuraciesproblem by the application of the RFID technology. By using the method ofmathematical model,this paper conducts a quantitative research on the RFIDtechnology investment decision-making problem.First, this paper improved the newsboy model considering the inventoryinaccuracies problem and normal lead time before investing, respectively established acentralized decision-making and a decentralized decision-making supply chain revenuemodel, solved by the method of Stackelberg game. And in order to eliminate the effectsof double marginalization effect, achieve the coordination of the decentralizeddecision-making supply chain, a buyback contract and a revenue sharing contract beendesigned and established a revenue model of the decentralized decision-making supplychain under different contract,then got the optimal solution.Then, in the condition ofthe order lead-time and the inventory inaccuracies problem has been improved after theinvestment of the RFID technology, respectively established a revenue model of acentralized decision-making supply chain and defferent revenue models of eachdecentralized decision-making supply chain under different contracts, and analysisedthe impact of the RFID investment on the supply chain profit and coordinationstrategy.Finally by comparing the maximum expected profit of the supply chain beforeand after the investment of the RFID technology, the investment decision-making conditions could be obtained and a numerical simulation is presented to verify theconclusion.This study can be used as a theoretical reference for supply chain enterprises inmaking decision on the RFID investment.