Research On Emergency Strategies Of Supply Chain Under Demand Disruption

With current social and economic globalization, companies cooperate with each other more closely. In the market, competition is also changing from companies into supply chains. However, supply chain management is confronted with some risks, while it brings a lot of operational benefits to companies. In recent years, many unconventional incidents have occurred, which may have a tremendous impact on the companies and society. Thus, it is necessary to study demand disruption and emergency decision-making theory of supply chain.In this paper, we develop a coordination model of a supply chain with one manufacture, one dominant retailer and multiple retailers under demand disruptions. We assume that the dominant retailer has market power and can stimulate demand. Firstly, we analyze normal operation of supply chain, and build a coordination model by the revenue-sharing contact. Secondly, when the demand is disrupted, we consider variations in market scale and price sensitive coefficient, and establish emergency decision model. Then, we introduce price regulation of the government into the research, and analyze emergency strategy. At the same time, we generate important insights by numerical examples. The results show that it necessary for partners to adjust the original contracts in a free market under demand disruptions. When the government regulates the price, the partners adjust the original contracts except when the demand increases substantially. In this case, the government can offer some subsidies to the partners, so that they can accept the new contract and improve the profitability of the whole supply chain. However, if the demand falls to zero, the dominant retailer is disinclined to provide demand-stimulating service to avoid more loss.There are two innovations in our paper. On the one hand, we consider simultaneous variations in demand scale and price sensitive coefficient to be as the influential factors of demand disruption, and study emergency decision-making in our supply chain. One the other hand, we introduce the factor, retail price regulations by the government, into the emergency decision model. The study enriches the relevant research in emergency decision to a certain degree. It not only can help companies to actively respond to abrupt disruption, adjust strategies in real time and reduce sudden damage, but also can help the government to understand the impact of emergencies on the related industries and formulate reasonable policies in order to guide the development of the industry.