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.
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This work was supported by National Natural Science Foundation of China under Grant No. 70371004 and PhD Program Foundation of Education Ministry of China under Grant No. 20040006023.
Guangming Huang is currently a Ph.D candidate at School of Economics & Management, BeiHang University, China. He received the B.S. degree in industrial engineering from Northeast University, China, in 1996, and the M.S. degree in automation engineering from Shenyang Institute of Chemical Technology, China, in 2000. His research interests include supply chain management, management information system, and electronic commerce.
Lu Liu is Professor and Chairman of the Department of Information Systems at School of Economics & Management, BeiHang University, China. Her current research interests include supply chain management, management information system, and electronic commerce.
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Huang, G., Liu, L. Supply chain decision-making and coordination under price-dependent demand. J. Syst. Sci. Syst. Eng. 15, 330–339 (2006). https://doi.org/10.1007/s11518-006-5022-6
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DOI: https://doi.org/10.1007/s11518-006-5022-6