| In this dissertation we investigate post-disruption coordination contracts using revenue sharing, that serve as contingency plans for the supply chain in the event of a disruption in the supply chain. The supply chain is composed of a single supplier, single manufacturer and a single retailer. We derive the optimality conditions for the supply chain when encountered by fractional disruptions at one or more facilities. The major policy question that needs to be addressed is whether or not the disrupted member should increase its capacity, if such adjustments are optimal for the entire supply chain. We study if there is a positive economic value in increasing production capacity at disrupted member(s) and if there is an incentive for the disrupted member(s) to expand its facility. We conclude that such contingency plans are absolutely essential to mitigate the ill-effects of disruption. In the event of major disruptions we propose that the disrupted members increase their production volume even at a higher marginal cost, while for small disruption the supply chain may opt for passive acceptance. Our results indicate conclude that beyond certain thresholds of disruption levels, it is recommended for the disrupted members to increase their capacity. Furthermore, we find that higher revenue shares are awarded to the disrupted members in the event that they increase their production capacity. |
