Research On Contract Mechanism And Coordination Efficiency Of A Three Level Supply Chain For A Short-Life-Cycle Product

We address the challenge in dealing with the three-level supply chain of a short-life cycle product.Aim at two different markets, we analysize the three agents of a decentralized supply chain systemhow to make their decisions on account of the basic contracts so that a centralized supply chain isoptimized and each agent is motivated in the expected profit. Then we choose the vegetable supplychain in Nanjing as study object and analyse the relationship between contracts and the coordinationof supply chain. Concretely, our contributions are as following.In order to achieve channel coordination and perfect coordination of a three-level supply chain,,the optimal order decision with a fixed price and the optimal order decision and the optimal pricingdecision with retail price depending on demand are analysized on account of the revenue sharingcontract. When a market price is fixed, the contract paremeters can determin whether or not a threelevel supply chain can accomplish the channel coordination. Then, the contract paremeters that canaccomplish the perfect coordination are concluded. Lastly, we can reach the following conclusions.Firstly, the channel coordination is related to not only the ordering decision but also the proportionbetween trade prices given by upstream enterprises and parameters of allocating profit given bydownstream enterprises. Secondly, the perfect coordination relies on contract paremeters and can beregulated by parameters of allocating profit. Thirdly, when market risk is high, the contract canencourage the retailer to increase the order quantity. When retail prices depend on demand, theuniqueness of the retailer’s decision is proved. And the increase of system profit is more apparentwhen market risk is high. In addition, we have the numerical experimentation and conclude that thecontract can work better when market risks are high.We study separately how the three level supply chain is coordinated by buy back contract andmardown-money contract when a market price is fixed. The necessary conditions that can carry outthe channel coordination and the perfect coordination under buy back contract are given. When retailprices are fixed, trade prices are in direct proportion to buy back prices, and raising market prices willincrease the expected order quantity of the retailer. In addition, the upstream companies are theinitiators for buy back contract when market risk is high. When retail prices depend on demand, athree level supply chain cann’t be coordinated by buy back contract, so the contract is mended by theparameters of allocating profit and the mended contract can coordinate the three level supply chain.We can reach the following conclusions. Firstly, the coefficients allocating profit will affect contract paremeters. Secondly, upstream enterprises will share risks with downstream enterprises by loweringprice when retail prices decrease. Thirdly, regulating the coefficients of allocating profit can makeboth of the system and individuals gain more. In addition, it’s proven that the variation regulations ofcontract paremeters for buy back contract are same as ones for markdown money contract when athree level supply chain is coordinated.An empirical analysis for the vegetable supply chain is given in order to study the relationshipbetween contract ability and the coordination efficiency, and in order to prove the relationship amongthe factors which affect coordination efficiency. The result shows that contract ability not onlyenhances greatly coordination efficiency but also promotes cooperation ability between enterprises. Inaddition, it shows that market risk can efficiently improves contract ability.