Supply Chain Coordination With An Overconfidence Retailer Based On Disruption

Previous studies of supply chain operations often assumes that all the main decision-makers in the supply chain is completely rational, but by studying the behavior of the theory which indicates that policymakers are actually not entirely rational. Moreover, there exists the possibility of supply chain disruption in the course. Therefore, we need to select the appropriate mechanism to deal with supply chain contract irrational decisions and disruption. This paper considers the case of overconfidence behavioral tendencies retailers and supply chain disruption that may occur, aiming at how to select and design the right supply chain contract coordination of the supply chain, the main contents are as follows.Focusing on two-stage supply chain under the conditions, we assume that disruption will have an impact on the product’s market size, and there exists a retailer of overconfidence in the two supply chain, due to the presence of a retailer overconfidence, which is too hard to estimate their marketing capabilities, so that there is a deviation of the market size variance of forecast demand, retailers demand forecasting model by establishing a rational retailers and overconfidence, analyzes the differences and benefits of the parties order quantity, and designs appropriate corrective buyback contract Retailers demand forecast due to overconfidence bias, avoiding the risk of unexpected events, resulting in less revenue loss of supply chain system.Considering the next three-stage supply chain conditions, unexpected events occurred in the market will affect the product’s market size, and market price changes will have an impact on demand, this time due to their overconfidence retailers underestimated the market demand sensitivity to price and market size variance, leading to the presence of bias on the overall forecast demand. By establishing the function, containing the rational analysis of existing retailers and the presence of overconfidence, we compare different retailers order quantity and profit, and select the appropriate revenue sharing contract mechanism to correct and avoid the conflict by establishing a three-tier supply chain retailers under demand conditions forecast send event risk, in order to reduce overall revenue losses supply chain.Conclusions of this study on supply chain emergencies happen in reality and presence of overconfidence could enable the policy makers to coordinate the supply chain decision-making theory, on the other hand, decision makers can make use of the results of this study, and the development of supply chain contract reasonable mechanisms to improve supply chain as a whole benefits.