Research On Retailer-Led Supply Chain With Option Contract Under Price-sensitive Stochastic Demand

With the continuous progress of science and technology and the rapid development of productive forces, the scale of the social commodities expand rapidly. The market transfer from seller’s market to buyer’s market. Customer demand also develop in the direction of diversification and personalization. As the direct respondent to the market information, retailers who are closest with consumers can grasp of market information. In reality, large retailers replace the traditional suppliers and become the core enterprise gradually, such as Wal-Mart, Carrefour and other large supermarkets.In the retailer-led supply chain, all the corporations in the supply chain will make efforts to maximize their self-interest, which are in conflict with the whole supply chain profit. So, a certain mechanism is needed for the coordination of the whole supply chain so as to raise the overall performance of the supply chain. Supply chain contract is the main ways and methods to coordination and control the members to the overall objective of supply chain. Option contract research from the financial sector, and was later extended to supply chain management. Such coordination mechanisms require retailers must purchase the right to buy a certain number of products in advance. Retailers can execute part or all the options after understanding the demand information, in order to improve the overall performance of the supply chain.Based on summarizing the interrelated theory, this paper makes an in-depth research on option contract in supply chain coordination. First of all we establish a retailer-led two-stage supply chain coordination model of option contract under price-dependent stochastic demand, and analyze its coordination mechanism and the profit distribution mechanism. Then based on the above model,building a supply chain coordination model of option contract composed of multiple supplier and a retailer which is leading, analyzing the condition to achieve the channel coordination and profit distribution. Finally the above model is simulated, and the impacts of variable of option contract parameters on supply chain member’s performance is discussed.The main work of this paper:(1) Make a summary about supply chain coordination, option contract and other interrelated theory.(2) Build a retailer-led two-stage supply chain coordination model of option contract under price-dependent stochastic demand and analyze its coordination mechanism and the profit distribution mechanism.(3) Build a supply chain coordination model of option contract composed of multiple supplier and a retailer which is leading, analyzing the condition to achieve the channel coordination and profit distribution under stochastic demand.(4) Discuss the impacts of variable of option contract parameters on supply chain members’performance.