Research On Supply Chain Coordination Mechanisms With Effort-depended Demand

With service-oriented manufacturing is becoming the inevitable trendof the future development of the manufacturing industry, someservice-oriented manufacturing enterprises dominated the supply chain ischanging to be retailers, who provide Product Service System (PSS) tocustomer. The retailer encounters in the effort-dependent demand. Wedesigned a shared cost sharing contract and a cost sharing option contract inthe case of deterministic demand and stochastic demand.It is proved that the contract is an effective way to coordinate thesupply chain in many papers. In the contract literature of supply chaincoordination, only cooperation without negotiations is taken into accountwhen we coordinate supply chain. In fact, we cannot make cooperationwithout a bargain. That is to say any co-operation of the supply chain isestablished on the basis of the negotiations. This paper is fully aware of theexistence of the supply chain negotiations. The supply chain coordinationprocess is divided into two phases to consider: the stage of cooperation andthe stage of negotiation. The real process of coordinating is bargaining firstand cooperation last, but this article using a reverse logic, which is toassume that the two sides can work together to verify the conditions forcooperation and analysis negotiation space; then analyze the negotiationsprocess.The conclusions drawn in this article:(1) It is proved that the supply chain system with effort-dependentdemand cannot be coordinated by whole-price contract, buyback contract,revenue-sharing contract and quantity-flexibility contract. (2) A cost and revenue sharing contract is designed to coordinate thesupply chain system, in which the retailer and the supplier cooperate toprovide PSS, under deterministic demand. The parameter of the contractsharing ratio, which must exist in an effective negotiating space, can bebargained in the negotiation between the retailer and the supplier. Thenegotiation can make a unique Nash Equilibrium solution, called NashBargaining Equilibrium, by their bargain power.(3) An option contract with cost sharing is designed to coordinate thesupply chain system, in which the retailer and the supplier cooperate toprovide PSS, under stochastic demand. The option contract has threeparameters, namely, the option price, the option exercise price and servicecost sharing ratio. It is proved that the option price and the option exerciseprice are both a linear function of the cost-sharing ratio, which exists in aneffective negotiating space. The retailer and the supplier can make aunique Nash Equilibrium solution, taking into account risk preferences andthe relative bargaining power of the members of the supply chain.