Supply Chain Coordination For A Short-life-cycle Product With Two-period Dynamic Pricing

As the development of technology and the level of people's requirement, products sold in the market are becoming more and more various while the life cycles of the products are shorter and shorter. People become much stricter with functions, qualities , prices and services of those products. All the changes have made the markets which enterprises faced more and more uncertain, and the life-cycle of the products shorter and shorter. With the gradually fierce competition between the companies, more and more enterprises are forced to focus their strategic sight into the supply chain. They all expect to use the integrated management or rectification to get more profits from the supply chain. They increase their ability to defy the risks from the uncertain market by building stable companionship among the supplier, the retailer and the manufacturer. The companionship is usually built on some coordination mechanisms. Among those mechanisms, supply chain contract is an efficient one. This paper defines the product researched as a short life cycle product with price declining and long production lead time, and studies a two-level supply chain coordination of a certain kind short life cycle product with demand uncertainty.Based on the researches done before, a supply chain coordination model with two-period for sale and dynamic pricing is raised in this paper, which has a leader of the manufacturer and a follower of retailer. Firstly, according to the characteristics of the product researched, centralized supply chain model is built as a criterion. Secondly, the paper separately builds decentralized supply chain models with price-only contract, buyback contract and mark-down money contract, and compared their best order quantity and profit with the centralized supply chain model. It is found that these contracts cannot coordinate the supply chain to the best state. Then, a model with buyback-mark-down-money combined contract is built, and it is discovered this combined contract can coordinate the supply chain to the best state as in the centralized supply chain. Moreover, necessary conditions are given for the contract parameters to satisfy the coordination.Finally, considering the characteristics of the model, genetic algorithm is developed to solve the problem. Examples are taken to analyze the combined contract, and the influence of key parameters' changing is discussed, which further verify the efficiency of the joint contract.