Dynamic Pricing and Supply Coordination with Reimbursement Contract under Random Yield and Demand
This paper investigates the dynamic pricing and supply chain coordination in a decentralized system that consists of one supplier and one manufacturer, in which both the market demand and production yield are stochastic. We show that the centralized expected profit is jointly concave in the producti...
Saved in:
| Main Authors: | , , , |
|---|---|
| Format: | Article |
| Language: | English |
| Published: |
Wiley
2013-01-01
|
| Series: | Discrete Dynamics in Nature and Society |
| Online Access: | http://dx.doi.org/10.1155/2013/631232 |
| Tags: |
Add Tag
No Tags, Be the first to tag this record!
|
| _version_ | 1832563608648679424 |
|---|---|
| author | Guo Li Lun Ran Xiaohang Yue Zhaohua Wang |
| author_facet | Guo Li Lun Ran Xiaohang Yue Zhaohua Wang |
| author_sort | Guo Li |
| collection | DOAJ |
| description | This paper investigates the dynamic pricing and supply chain coordination in a decentralized system that consists of one supplier and one manufacturer, in which both the market demand and production yield are stochastic. We show that the centralized expected profit is jointly concave in the production quantity and order quantity when the price is ex-ante selected. We also derive the equilibrium strategies in the decentralized system and prove that the entire profit of supply chain is inevitably lower than that under centralized system. Based on this, we propose a reimbursement contract to coordinate the decentralized supply chain so as to achieve the maximized profit. It is worth mentioning that, under reimbursement contract, the equilibrium production and order quantities are irrelevant to the manufacturer's risk sharing coefficient but are only determined by the supplier’s risk sharing coefficient. |
| format | Article |
| id | doaj-art-fc98929f1603484eb125091b34fb64f1 |
| institution | Kabale University |
| issn | 1026-0226 1607-887X |
| language | English |
| publishDate | 2013-01-01 |
| publisher | Wiley |
| record_format | Article |
| series | Discrete Dynamics in Nature and Society |
| spelling | doaj-art-fc98929f1603484eb125091b34fb64f12025-02-03T01:13:12ZengWileyDiscrete Dynamics in Nature and Society1026-02261607-887X2013-01-01201310.1155/2013/631232631232Dynamic Pricing and Supply Coordination with Reimbursement Contract under Random Yield and DemandGuo Li0Lun Ran1Xiaohang Yue2Zhaohua Wang3School of Management and Economics, Beijing Institute of Technology, Beijing 100081, ChinaSchool of Management and Economics, Beijing Institute of Technology, Beijing 100081, ChinaLubar School of Business, University of Wisconsin-Milwaukee, Milwaukee, WI 53201-0413, USASchool of Management and Economics, Beijing Institute of Technology, Beijing 100081, ChinaThis paper investigates the dynamic pricing and supply chain coordination in a decentralized system that consists of one supplier and one manufacturer, in which both the market demand and production yield are stochastic. We show that the centralized expected profit is jointly concave in the production quantity and order quantity when the price is ex-ante selected. We also derive the equilibrium strategies in the decentralized system and prove that the entire profit of supply chain is inevitably lower than that under centralized system. Based on this, we propose a reimbursement contract to coordinate the decentralized supply chain so as to achieve the maximized profit. It is worth mentioning that, under reimbursement contract, the equilibrium production and order quantities are irrelevant to the manufacturer's risk sharing coefficient but are only determined by the supplier’s risk sharing coefficient.http://dx.doi.org/10.1155/2013/631232 |
| spellingShingle | Guo Li Lun Ran Xiaohang Yue Zhaohua Wang Dynamic Pricing and Supply Coordination with Reimbursement Contract under Random Yield and Demand Discrete Dynamics in Nature and Society |
| title | Dynamic Pricing and Supply Coordination with Reimbursement Contract under Random Yield and Demand |
| title_full | Dynamic Pricing and Supply Coordination with Reimbursement Contract under Random Yield and Demand |
| title_fullStr | Dynamic Pricing and Supply Coordination with Reimbursement Contract under Random Yield and Demand |
| title_full_unstemmed | Dynamic Pricing and Supply Coordination with Reimbursement Contract under Random Yield and Demand |
| title_short | Dynamic Pricing and Supply Coordination with Reimbursement Contract under Random Yield and Demand |
| title_sort | dynamic pricing and supply coordination with reimbursement contract under random yield and demand |
| url | http://dx.doi.org/10.1155/2013/631232 |
| work_keys_str_mv | AT guoli dynamicpricingandsupplycoordinationwithreimbursementcontractunderrandomyieldanddemand AT lunran dynamicpricingandsupplycoordinationwithreimbursementcontractunderrandomyieldanddemand AT xiaohangyue dynamicpricingandsupplycoordinationwithreimbursementcontractunderrandomyieldanddemand AT zhaohuawang dynamicpricingandsupplycoordinationwithreimbursementcontractunderrandomyieldanddemand |