Research On A Supply Chain With Sale Effort And Combined Contracts Under Implementation Of Rfid Technology

This paper investigates the issue of coordination and performance of a supply chain with sales effort and combined contracts based on RFID (Radio Frequency Identification) technology. With the fierce competition, firms in supply chain always form a partnership with each other by using contracts to achieve the overall optimization of supply chain, such as acquiring coordination, improving performance and increasing allocated supply chain profit. In reality, retailers usually pay sales effort to attract more customers and sold out more products. Current study certificate that almost none of the contracts such as the insurance contract, the revenue sharing contract, the sale rebate contract and the SRP (the Sale Rebate and Penalty) contract is able to coordinate a supply chain and allocate its profit arbitrarily when the market demand is influenced by retailer sales effort. Meanwhile, there emerge many new challenges in inventory management with the quick development of economy and supply chain. Considering the advantages of real-time monitoring and visualization of RFID technology, people think the adoption of RFID technology can resolve IRI (Inventory Record Inaccuracy) problem. This paper introduces RFID technology to lessen the chance of losing or misplacing inventory, improve stock level and sales rate and alleviate the IRI problem.This paper carries on research of a supply chain with IRI problem and a market demand which is sensitive to retailer sales effort according to the following order. Firstly, we apply Newsvendor model to study the centralized supply chain before/after the adoption of RFID technology and reach corresponding optimal decisions, including output, the level of sales effort and maximum profit. Secondly, we model the decentralized supply chain under the insurance contract, the revenue sharing contract, the sale rebate contract and the SRP contract before/after the adoption of RFID technology, respectively. We conclude that most contracts based on one coordination mechanism cannot coordinate a supply chain by comparing the optimal decisions of decentralized supply chains with the centralized supply chain. Next, we attempt to choose, design and integrate proper supply chain contracts which based on different coordination mechanisms into combined contract before/after the adoption of RFID technology, respectively. Also, we compare the optimal decision of decentralized supply chain under above combined contract with the centralized supply chain. We find that only integrate the insurance contract with sale rebate contract or SRP contract can achieve channel coordination and arbitrary allocate supply chain profit, simultaneously. Finally, to visualize the improvement of optimum strategy and maximize profit after applying combined contracts and implement RFID technology, extensive numerical studies are conducted, and managerial implications are proposed.