Motivated by Hema Fresh’s new-retail case, we study the coordination of a two-echelon fresh-product supply chain consisting of a single supplier and a single retailer. Due to a long production lead time, the supplier has to make production decision in advance based on early demand information. The market demand can be updated during the supplier’s production lead time. Hence, the retailer would make order decision according to the latest demand information. Incorporating risk-sharing mechanism of overproduction and overstock, we propose a novel bi-directional risk-sharing contract to coordinate such a supply chain with demand information updating. We construct a two-stage optimization model in which the supplier first decides production quantity, and then the retailer decides final order quantity not exceeding the supplier’s initial production. In both the centralized and decentralized systems, we analytically derive the unique equilibrium of production and order decisions in a Stackelberg supplier-led game. We prove that the proposed contract can realize supply chain perfect coordination and explore how the proposed contract affects the members’ decisions. The theoretical results show that, by turning the risk-sharing proportions, the supply chain profit can be arbitrarily split between the members, which is a desired property for supply chain coordination. Compared with the single risk-sharing contract, the proposed contract results in a greater supply chain profit and achieves Pareto improvement for both members. Furthermore, we also explore how the risk preference and negotiating power affect the contract selection and the additional profit allocation of the supply chain. Numerical examples are presented to verify our theoretical results.
Keywords: Supply chain management, demand information updating, dynamic order, supply chain coordination, bi-directional risk-sharing contract
@article{RO_2021__55_1_285_0,
author = {Yang, Honglin and Peng, Jiawu},
title = {Coordinating a fresh-product supply chain with demand information updating: {Hema} {Fresh} {O2O} platform},
journal = {RAIRO. Operations Research},
pages = {285--318},
year = {2021},
publisher = {EDP-Sciences},
volume = {55},
number = {1},
doi = {10.1051/ro/2021024},
mrnumber = {4234137},
language = {en},
url = {https://www.numdam.org/articles/10.1051/ro/2021024/}
}
TY - JOUR AU - Yang, Honglin AU - Peng, Jiawu TI - Coordinating a fresh-product supply chain with demand information updating: Hema Fresh O2O platform JO - RAIRO. Operations Research PY - 2021 SP - 285 EP - 318 VL - 55 IS - 1 PB - EDP-Sciences UR - https://www.numdam.org/articles/10.1051/ro/2021024/ DO - 10.1051/ro/2021024 LA - en ID - RO_2021__55_1_285_0 ER -
%0 Journal Article %A Yang, Honglin %A Peng, Jiawu %T Coordinating a fresh-product supply chain with demand information updating: Hema Fresh O2O platform %J RAIRO. Operations Research %D 2021 %P 285-318 %V 55 %N 1 %I EDP-Sciences %U https://www.numdam.org/articles/10.1051/ro/2021024/ %R 10.1051/ro/2021024 %G en %F RO_2021__55_1_285_0
Yang, Honglin; Peng, Jiawu. Coordinating a fresh-product supply chain with demand information updating: Hema Fresh O2O platform. RAIRO. Operations Research, Tome 55 (2021) no. 1, pp. 285-318. doi: 10.1051/ro/2021024
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