Study On Supply Chain Coordination Of Perishable Products Under Shortage Cost Sharing With Demand Information Updating

Perishable goods are those with long lead time, short product life cycles, low salvagevalue and highly unpredictable demands. With the rapid development of science andtechnology, innovation is promoted faster than before and then the product life cycle isgradually shortened, as a result, more and more products have the characteristics ofperishable goods, which mean the perishable goods have become an important part ofnational economy. Supply chain option contract is a new research direction in the presentstage for domestic and foreign scholars. Option contract can not only through theformulation of relevant contract parameters to make the supply chain coordination, andcan avoid the supply chain in a certain degree of risk. At the same time, because theoption contract with options that financial derivatives, which belongs to theinterdisciplinary between reference tools and knowledge of other subjects, is currently thesubject of a research trend to solve the coordination problem in supply chain.Due to the above background, this paper constructs a supply chain option contractcoordination model under the shortage cost sharing with demand information updating forperishable goods.This paper constructs a model of a perishable product supply chain as the benchmark.Then in the absence of option contract situation, a Stackelberg game model is built. Theoptimal production and order quantity are analyzed under decentralized supply chainsetting. By comparing with the optimal decisions in centralized setting, it is found that thesupply chain is inefficient under decentralized setting. An option contract is designed tocoordinate the supply chain. After several analyses, it is found that the sharing level whenout of stock is positive related to ordering quantity. At last, the optimal ordering quantityand option purchase volume is analyzed by introducing the option contract to coordinatethe supply chain. The result shows that after the demand is updated, manufacturer wouldquickly responses to the demand and the supply chain is optimized. Then, a numericalexample is conducted to testify the contract, which shows that by introducing the optioncontract, the profits of both manufacturer and retailer are increased, the supply chainachieves Pareto improvement.