Drop-shipping Supply Chain Coordination In The Presence Of Supply Risk

In globalizing supply chains and increasingly complex market environment,supply risk has been the concern of business managers and researchers.Meanwhile,with the rapid development of e-commerce,drop-shipping supply chain is widely used in electronic trading platform.In this paper,based on supply risk in the drop-shipping supply chain,we consider the supply chain decision-making model composed of a single supplier and a single network retailer,internet retailers through drop-shipping to the supplier for initial procuremen-t,due to the existence of supply risks,retailers will be in the spot market emergency procurement.The main contents and conclusions are as follows:Considering the drop-shipping supply chain in the presence of supply risk and emer-gency procurement and constructing a centralized and decentralized supply chain decision model,we give the optimal wholesale unit price decision of the supplier,the optimal ini-tial purchasing decision of the retailer,the emergency purchasing decision,and design a simple benefit sharing contract which can make the supply chain reach coordination.We also show that the retailer whether uses the spot market emergency procurement decision is affected by the transportation cost;purchasing decisions are influenced by different factors at.different transportation costs.Compared with the supply chain profit without emergency purchasing decision,it is found that the presence of emergency purchases allows retailers to effectively respond to suppliers' supply risks,and it will increase retailers' profits but reduce suppliers' profits.Therefore,the existence of emergency procurement has beneficial-risk response effect;there are unfavorable-substitution effect,but the risk response effect is greater than the substitution effect,so the existence of emergency procurement makes the profit of the supply chain increase;moreover,we discussed the value of emergency procurement on supply chain coordination,it is found that the supply chain coordination has no effect,on the value of emergency procurement when the market demand is low,but the supply chain coordination would weak the value of emergency procurement if the market demand is high.In addition,by comparing the traditional model supply chain with the drop-shipping supply chain,studies have shown that if the transportation costs are high,the supply chain coordination will increase the value of the drop-shipping;if the transportation costs are low,and the demand is larger or smaller,the supply chain coordination will increase the value of drop-shipping;if the demand is moderate,then supply chain coordination reduces the value of drop-shipping.