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Conference Paper: On improving incentive in a supply chain: Wholesale price contract vs quantity dependent contract

TitleOn improving incentive in a supply chain: Wholesale price contract vs quantity dependent contract
Authors
KeywordsCoordination
Game theory
Quantity dependent contract
Retailer
Supply chain
Wholesale price contract
Issue Date2010
PublisherIEEE. The Journal's web site is located at http://ieeexplore.ieee.org/xpl/conhome.jsp?punumber=1800022
Citation
The 40th International Conference on Computers and Industrial Engineering, (CIE 2010), Hyogo, Japan, 25-28 July 2010. In Proceedings of the International Conference on Computers & Industrial Engineering, 2010, p. 1-6 How to Cite?
AbstractIn this paper, we first study the performance of a supply chain consisting of one retailer and one supplier. The supplier sets the price scheme of some goods and the retailer then decides the order level and sells the goods in the market. Specifically, a quadratic cost function is assumed here to approximate the U-shape cost curve commonly observed in industries. Two kinds of contracts offered by the supplier are investigated, namely wholesale price contract and quantity dependent contract. Wholesale price is fixed under the first contract but varies depending on order level under the second one. We show that certain wholesale price contract successfully induces the retailer to order at a level such that supply chain profit is maximized, but extra cost in implementation may occur due to supplier's disagreement on this price. Given this, we propose an efficiency measure to show to what extent the wholesale price contract helps to increase supply chain profit. For quantity dependent contract, we show that it can coordinate the supply chain and leads to a proportional division of supply chain profit. We then generalize the analysis to cover the case of multiple retailers and single supplier where similar results are also obtained.
DescriptionTheme: Soft Computing Techniques for Advanced Manufacturing and Service Systems
Persistent Identifierhttp://hdl.handle.net/10722/126237
ISBN
References

 

DC FieldValueLanguage
dc.contributor.authorHuang, Xen_HK
dc.contributor.authorChoi, SMen_HK
dc.contributor.authorChing, WKen_HK
dc.date.accessioned2010-10-31T12:17:22Z-
dc.date.available2010-10-31T12:17:22Z-
dc.date.issued2010en_HK
dc.identifier.citationThe 40th International Conference on Computers and Industrial Engineering, (CIE 2010), Hyogo, Japan, 25-28 July 2010. In Proceedings of the International Conference on Computers & Industrial Engineering, 2010, p. 1-6en_HK
dc.identifier.isbn978-142447295-6-
dc.identifier.urihttp://hdl.handle.net/10722/126237-
dc.descriptionTheme: Soft Computing Techniques for Advanced Manufacturing and Service Systems-
dc.description.abstractIn this paper, we first study the performance of a supply chain consisting of one retailer and one supplier. The supplier sets the price scheme of some goods and the retailer then decides the order level and sells the goods in the market. Specifically, a quadratic cost function is assumed here to approximate the U-shape cost curve commonly observed in industries. Two kinds of contracts offered by the supplier are investigated, namely wholesale price contract and quantity dependent contract. Wholesale price is fixed under the first contract but varies depending on order level under the second one. We show that certain wholesale price contract successfully induces the retailer to order at a level such that supply chain profit is maximized, but extra cost in implementation may occur due to supplier's disagreement on this price. Given this, we propose an efficiency measure to show to what extent the wholesale price contract helps to increase supply chain profit. For quantity dependent contract, we show that it can coordinate the supply chain and leads to a proportional division of supply chain profit. We then generalize the analysis to cover the case of multiple retailers and single supplier where similar results are also obtained.en_HK
dc.languageengen_HK
dc.publisherIEEE. The Journal's web site is located at http://ieeexplore.ieee.org/xpl/conhome.jsp?punumber=1800022-
dc.relation.ispartof40th International Conference on Computers and Industrial Engineering: Soft Computing Techniques for Advanced Manufacturing and Service Systems, CIE40 2010en_HK
dc.rightsProceedings of the International Conference on Computers & Industrial Engineering. Copyright © IEEE.-
dc.rights©2010 IEEE. Personal use of this material is permitted. However, permission to reprint/republish this material for advertising or promotional purposes or for creating new collective works for resale or redistribution to servers or lists, or to reuse any copyrighted component of this work in other works must be obtained from the IEEE.-
dc.rightsCreative Commons: Attribution 3.0 Hong Kong License-
dc.subjectCoordinationen_HK
dc.subjectGame theoryen_HK
dc.subjectQuantity dependent contracten_HK
dc.subjectRetaileren_HK
dc.subjectSupply chainen_HK
dc.subjectWholesale price contracten_HK
dc.titleOn improving incentive in a supply chain: Wholesale price contract vs quantity dependent contracten_HK
dc.typeConference_Paperen_HK
dc.identifier.emailChing, WK:wching@hku.hken_HK
dc.identifier.authorityChing, WK=rp00679en_HK
dc.description.naturepublished_or_final_version-
dc.identifier.doi10.1109/ICCIE.2010.5668333en_HK
dc.identifier.scopuseid_2-s2.0-78651430197en_HK
dc.identifier.hkuros175377en_HK
dc.relation.referenceshttp://www.scopus.com/mlt/select.url?eid=2-s2.0-78651430197&selection=ref&src=s&origin=recordpageen_HK
dc.identifier.spage1-
dc.identifier.epage6-
dc.publisher.placeUnited States-
dc.description.otherThe 40th International Conference on Computers and Industrial Engineering, (CIE 2010), Hyogo, Japan, 25-28 July 2010. In Proceedings of the International Conference on Computers & Industrial Engineering, 2010, p. 1-6-
dc.identifier.scopusauthoridHuang, X=36617352800en_HK
dc.identifier.scopusauthoridChoi, SM=26435077400en_HK
dc.identifier.scopusauthoridChing, WK=13310265500en_HK

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