Supply chain decision-making and coordination under price-dependent demand

Guangming Huang; Lu Liu

doi:10.1007/s11518-006-5022-6

Journal of Systems Science and Systems Engineering ›› 2006, Vol. 15 ›› Issue (3) : 330 -339. DOI: 10.1007/s11518-006-5022-6

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Supply chain decision-making and coordination under price-dependent demand

Guangming Huang ¹^,^a
, Lu Liu ¹

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Abstract

This paper studies the decision-making and coordination of supply chain (SC) considering the effect of price-dependent demand. By assuming demand decreases as the price increases, we analyse the impacts of the dependence on the SC in three different models: decentralized without coordination, centralized coordination and decentralized with coordination by revenue sharing contract. The existence of the best solution in the different models is proved, and the performance of revenue sharing coordination SC is similar to the centralized one. We find that the more evidently the price affects the demand, the more revenue sharing contract improves the performance of SC. The dependence affects the decision-making and the parameter setting of revenue sharing contract is also found.

Keywords

Supply chain coordination / price-dependent demand / decision making / revenue sharing

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Guangming Huang, Lu Liu. Supply chain decision-making and coordination under price-dependent demand. Journal of Systems Science and Systems Engineering, 2006, 15(3): 330-339 DOI:10.1007/s11518-006-5022-6

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