Research On Production And Pricing Decisions Under Supply Uncertainty

Under the circumstance of rapid development of technology,e-commerce and economic globalization,supply uncertainty plays a significant role in the supply chain.Therefore,the research on supply chain uncertainty is urgent.The common factors of supply uncertainty include yield uncertainty and production cost uncertainty,which plays an important role in the supply and demand matching and influence the manufacturer’s production strategy and retailer’s ordering strategy.In addition,the channel structure also performance an important impact on the supply chain profits and members decisions.In this paper,we study the influence of yield uncertain and cost uncertainty in different supply chain structures,get the joint pricing and production decisions.The research and main conclusions are summarized as follows:First of all,we establish a multi-product model with yield uncertainty and stochastic market demand to analyze the manufacturer’s joint production and pricing decision.We assume that the output of high-end product is random and the market price is endogenous,the output of low-end products is stable but the price is exogenous.The defective high-end products caused by the yield uncertainty are converted to qualified low-end products with a certain cost.Base on the basic model,we characterize the optimal pricing and production decisions and develop an algorithm to compute the optimal solution.We also investigate the impact of the yield uncertainty on the firm’s performance,and explore that how the stability of market demand,emergent fulfillment costs,and down-conversion cost influence this effect.We find that the profit of the manufacturer deteriorates when the risk of the yield uncertainty is high.In the face of yield uncertainty,the firm prefers to decrease(increase)the production quantity of the high-end(low-end)products.The firm has a low incentive to eliminate the yield uncertainty when the market demands are quite unstable,the emergent fulfillment costs are low,or the down-conversion cost is high.Second,we establish a two-stage model with production cost uncertainty in the direct sales channel and retail channel model,respectively.We characterize the optimal pricing and production decisions and compare the decisions and profits in different periods.The study found that in both the direct channel and retail channel,the production quantities(market price)in both supply chain are monotonically increasing(decreasing)with respect to the learning rate.There is a "cross-period effect" of learning-by-doing in the direct sales channel model,where the manufacturer sacrifices the profits of the first period in order to obtain a higher expected profit in the second period.The manufacturer’s choice of channel depends on the direct selling cost,and the learning effect aggravates the problem of "double marginalization".At last,we establish a two-stage dual-channel model with learning effect to solve the supply chain members’ equilibrium decision and the profit of each period.Compare the decisions and profits in different periods to analyze the influence of cost-learning effect.The results show that both the wholesale price and the market price(yield)of each period are monotonically decreasing(increasing)with the learning rate.The total profit of the manufacturer and the profit of the supply chain both monotonically increase with the learning rate.The dual-channel with cost learning effect still weaken the "double marginal".