Coordination Mechanism With Quantity Discount Contract For Cloud Service Supply Chain

With the rapid development of cloud computing industry, cloud service as a new delivery method has been known by all walks of life. All members and service processes in this could service environment consist of this long and complicated cloud service supply chain. All of them make decisions depending on their own benefits and ignoring the benefits in the supply chain. In other words, the strategies of members may conflict with the entire one. Therefore, studying on efficient supply chain strategies to achieve coordination makes great significance on improving the efficiency of cloud service supply chain. Based on some literature, this paper focuses on the study of coordination strategy problems between infrastructure providers (AIP) and application service provider (ASP) by establishing a two level cloud service supply chain coordination model. According to AIP and two supply chain structures, this paper introduced quantity discount contract and risk sharing strategy into this model and considered how AIP and ASP to make optimized strategies in order to get the greatest profit and the strongest stability of this supply chain.First, study of the operational characteristics and models of cloud service supply chain. By going through the contents of the current categories of services provided by both domestic and foreign firms and their multi-role in the supply chain, we summarized the structures and members of cloud service supply chain, and figured out how the models of such supply chains operate. A study of distinguishing between the original and cloud service supply chain together with a conclusion of features of cloud service supply chain and the variation of decision variables within the contract model were established on the surface of these efforts.Second, research on the coordination strategies of the cloud service supply chains dominated by infrastructure providers. To cope with the price sensitive situation of the market demand, and urge ASPs (Application service provide) to expand investments, quantity discount contract model was introduced into the coordination model of the cloud supply chain by infrastructure providers aimed at effecting the decision making process of ASPs by alternating the decision variables of the model. The results indicate that quantity discount contract model is able to maximize the overall profit of the entire supply chain, by effectively increasing the profit of supply chain members. Meanwhile, by alternating the discount ratio of the model, it is capable of reallocating the overall profit of the entire supply chain properly, and thus rearrange the connections of the companies.Third, investigation through the quantity discount contract model of cloud service supply chain under Cooperation-competition mode. We introduced risk-sharking strategy into the original quantity discount contract model, by valuing the risk sharing factors properly to urge upstream and downstream firms to positively take cooperation-competition strategies. We intended to enhance the stability of the alliance between the upstream and downstream firms in the supply chain. The results imply that the cloud service supply chain under Cooperation- competition mode can provide a maximum profit at the same time reallocating appropriately the profit of the supply chain by setting the risk sharing factor reasonably.Fourth, Case analysis, in this AIP dominated cloud service supply chain coordination model, quantity discount contract not only can increase the order quantity and the supply chain profit, but also can coordinate the profit distribution among supply chain members. In this supply chain coordination model under Cooperation-competition mode, quantity discount contract that introduce risk sharing strategy can lower the market risk that service providers face. What’s more, the supply chain can get the biggest profit, and proper distribution of profit can also improve the stability of this chain. After comparing these two chain structures, we think that it is better for the further development of supply chain to introduce quantity discount contract in risk sharing strategy.