The Number Of Perishable Goods Supply Chain Flexibility In The Supply Is Not Reliable Under The Conditions Of Contract Research

With economic globalization and keen competition of markets, uncertainty becomes the main feature of a supply chain. Besides demand uncertainty, supply also has a strong unreliability. On the one hand, there are all kinds of uncertain factors inside the supply chain. For example, the supplier or supplier's supplier may have difficulty to procure raw material, have capacity constraints or malfunction of the equipment. All these will lead to the insufficient supply, which significantly reduces the supply chain's efficiency. On the other hand, all kinds of unexpected events outside the supply chain occur frequently, which greatly affected the supply chain's normal operation.Quantity flexibility contract (QFC) is an effective way to cope with demand uncertainty, and it makes the members of the supply chain share the profit and risk. So it has been adopted by a number of big companies with a good implementation effect. However, because of the uncertain environment of the supply chain, there is risk that the supplier is not able to deliver all the quantity ordered timely when implementing the QFC. So, the study of QFC under unreliable supply is of important practical value.This paper provides a model which takes both the uncertain demand and the unreliable supply into consideration. A QFC model composed of a supplier and a retailer under unreliable supply is built. Under this model the optimal ordering policy of the retailer is studied. Further more, we extend the research on the coordination of the supply chain under unreliable supply, also on the retailer's optimal ordering policy when the retailer has a lost-averse preference.We get the following main conclusions.Firstly, under insufficient supply QFC, the unreliable supply will make the retailer order more, but the relationship between the optimal ordering quantity and the supply reliability is non-monotone, while the retailer's optimal profit is increasing in the supply reliability. Under the QFC with supply interruption risk, the optimal ordering quantity is not influenced by the supply interruption risk, while the retailer's optimal expected profit is decreasing in the probability of the supply interruption. On the whole, the retailer suffers from the supply unreliability, and the retailer's optimal expected profit is increasing in the supply reliability, so the retailer always choose the more reliable supplier.Secondly, the QFC under unreliable supply (insufficient supply) can make the supply chain coordinated under certain conditions. So the QFC can be chosen to optimize the performance of supply chain under unreliable supply.Thirdly, when the retailer has a loss-averse preference, the relationship between the optimal ordering quantity and the loss-averse coefficient is non-monotone. So does the relationship between the optimal ordering quantity and the supply reliability. The retailer's optimal expected utility is decreasing in the loss-averse coefficient and increase with the supply reliability.