On Equivalent Efficiency Principle Based Supply Chain Coordination

With increased competitive market environment, enterprises in the supply chain need to cooperate with each other to improve the overall competitiveness. Thus, the supply chain can maximize the benefits to achieve coordination. In reality, information of enterprises in the supply chain is asymmetric. To solve this problem, researchers have proposed the contract coordination mechanism which is used widely at present. Generally, researches on the supply chain contract coordination mechanism are around the following four contracts:wholesale price contract, revenue-sharing contract, buy-back contract and quantity flexibility contract. This paper studies the supply chain coordination based on the models of these four contracts.First, the paper puts forward a new mechanism of supply chain coordination-equivalent efficiency principle. This theory is that the efficiency of enterprises on supply chain equal to each other can be realized, so as to achieve coordination. In order to verify the feasibility of achieving coordination of equivalent efficiency principle, the paper discusses the sufficiency and the necessity. About the sufficiency, the paper compares the optimal order quantity and wholesale price under equivalent efficiency principle with these under the contract coordination mechanism. Then, we can verify the sufficiency of achieving coordination of equivalent efficiency principle. About the necessity, the paper determines the equivalence of efficiency of the suppliers and the retailers got by the optimal order quantity under the contract coordination mechanism. In order to analyze the case cannot be directly determined by the formula, we set specific values for the parameters in the contract models. Then, we can verify the necessity of achieving coordination of equivalent efficiency principle. Thus, the equivalent efficiency principle can be used to achieve coordination. And the equivalent efficiency principle has advantages compared with the contract coordination mechanism. The contract coordination mechanism only purchases the maximization of the benefits, while the equivalent efficiency principle also purchases high efficiency. It can achieve maximum benefits and high efficiency at the same time which can fulfill the needs of enterprises in the competitive market environment better.And then, the paper carries on the preliminary research on the three-level supply chain under the revenue-sharing contract and the buy-back contract using the equivalent efficiency principle, which validates the feasibility of achieving coordination of the equivalent efficiency principle. At the same time, the paper lays the basis for studies of multistage supply chain coordination.At last, this paper summarizes the research results, and reaffirms the feasibility of achieving coordination of the equivalent efficiency principle. It enriches the research content in the field of supply chain coordination, and has far-reaching implications on this field.