Coordinating a supply chain for deteriorating items with a revenue sharing and cooperative investment contract |
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Affiliation: | 1. Department of Mathematics, Bethune College, Calcutta University, Kolkata 700 006, India;2. Department of Decision Sciences and Management Information Systems, John Molson School of Business, Concordia University, Montreal, QC, Canada H3G 1M8;1. School of Management, University of Science and Technology of China, Hefei 230026, China;2. School of Business, Nantong University, 9 Seyuan Road, Jiangsu, Nantong 226019, China;1. Graduate School of Business and Administration, Shu-Te University, Yen-Chao, Kaohsiung 824, Taiwan;2. Department of Industrial Management, Chien Hsin University of Science and Technology, Taoyuan 320, Taiwan;1. The Logistics Institute-Asia Pacific, National University of Singapore, 21 Heng Mui Keng Terrace, #04-01, 119613, Singapore;2. Department of Operational Research, Faculty of Mathematical Sciences, New Academic Block University of Delhi, Delhi 110007, India;3. School of Engineering and Sciences, Tecnológico de Monterrey, E. Garza Sada 2501 Sur, Monterrey, Nuevo León C.P. 64849, Mexico |
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Abstract: | In this study, a one-manufacturer–one-retailer supply chain model for deteriorating items with controllable deterioration rate and price-dependent demand is developed, in which both players cooperatively invest in preservation technology to reduce deterioration. Algorithms are designed to obtain the pricing and preservation technology investment strategies in both integrated and decentralized scenarios. It is shown that cooperative investment strategy benefits the manufacturer but damages the profits of the retailer and the whole supply chain. A revenue sharing and cooperative investment contract, which combines revenue sharing and cost sharing mechanisms, is thus designed to coordinate the supply chain. Numerical simulations and sensitivity analysis of the equilibrium strategies and coordinating results on key system parameters are given to verify the effectiveness of the contract, and meanwhile get some managerial insights. The results show that only when the revenue sharing rate lies roughly between 1/2 and 3/4 can the contract perfectly coordinate the supply chain in most cases, which has an important guiding significance for the supply chain coordination of deteriorating items when considering preservation technology investment. |
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Keywords: | Deteriorating items Pricing Preservation technology Investment Revenue sharing Supply chain coordination |
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