Supply Chain Coordination Model Under Strategic Customers

Technology development and economy growth have decreased the quality and price gap among different brands, so similar products are often viewed as substitutes, and customers have more and more alternatives. Thus, retailers are facing increasingly fierce competition. At the same time, service level has become a standard for customers to evaluate a retailer, and the higher level the retailer is, the more customers will come. Here, we define inventory availability as service level. Especially for unseasonable goods, customers are likely to focus more on the retailer’s inventory level. Stockouts will cause customers’ unsatisfactory, and they will change to other retailers for the same goods. It means that stockouts will affect customer next time shopping behavior, further decreasing retailer’s profits and reputation. Here, we call this kind of customer is strategic customer.Retailer’s service level influences strategic customer behavior, and strategic customer behavior also affects retailer’s inventory decision, thus further influencing the whole supply chain’s inventory decision. Therefore, we consider this kind of customer strategic behavior in the paper, establish dynamic game relationship under a revenue-sharing contract, to exam the supply chain’s coordination problem.The thesis is mainly from the following four aspects:(1) Briefly introduce concept of strategic customer, discuss the theories about supply chain coordination, promising mechanism and replenishment policies etc.(2) Develope revenue-sharing contract for supply chain under vendor-managed inventory and strategic customers. Develop a Stackelberg game model between single retailer and single supplier, analyze their decisions. Finally, introduce three subsidy contracts to coordinate the supply chain.(3) On the basis of revenue-sharing contract, our paper then considers penalty fees caused by stockouts, and analyze the supply chain’s function, a leftover subsidy contract is introduces here to coordinate the supply chain. In order to compensate customers and increase supply chain’s total profits, availability guarantee is introduced here.(4) For demand is still not totally met in above models, we further develop a replenishment model to increase the supply chain’s expected profit.