Supply Chain Coordination With Demand Updating And Transportation Cost

The thesis is concerned with coordinating a two level supply chain with a supplier and a retailer, where the transportation cost is due to the supplier and the demand information is updated in the second stage. First, we review the literature on supply chain coordination with contracts; in particular, we discuss the buyback contract, and analyze the buyback contract with demand information updating using bi-level programming.Second, based on the newsvendor model, we construct a supply chain model with demand information updating and take into consideration of transportation cost in the supply. We consider the coordination issues in a decentralized supply chain system with a supplier and a retailer, where, due to the dominated position of the retailer, the supplier has to pay the transportation cost; and due to risk averse, the retailer places orders twice, once at the beginning of each selling period. Such ordering policy increases the transportation cost as well as the total cost of the supply chain.Then, we study how to apply buyback contact to coordinate the above supply chain, and build an optimization model for the problem. We analyze properties of the problem, develop optimal solutions and provide numerical simulation. Our results show that the buyback contract can motivate the retailer to place order just once, thus reduce the transportation cost as well as the total cost of the supply chain. Therefore, buyback contract can coordinate such a supply chain.