Research On Supply Reliability Enhancement Under Supply Disruption

This papers studies a two-stage decentralized system with determined demand that composed of a single supplier and a single manufacturer, in which the supplier face the risk of supply disruptions, but she can choose to spend a certain amount of cost to improve supply reliability. Firstly, we take the centralized system as the benchmark model, then discuss the influence of two different decision-making model on supply reliability enhancement and the members under the decentralized system, making an analysis about which decision-making model is more conducive to the supply chain members and the entire supply chain, and extend the study to how to use revenue sharing contract to realize supply chain coordination for achieving the same benefits under the centralized situation. One decision-making model is the supplier-leader model, the other is the manufacturer-leader model. The essence of two decision-making model is the opposite decision sequence lead to the result:which party has the right to set the wholesale price first is the leader, the other who makes decision subsequently is the follower; Secondly, we also study decisions’ change in two decision-making model under asymmetric initial reliability information, then construct screening contract according to the Principal Agent theory, and discusses the impact of screening contract on the supply reliability enhancement and supply chain member decisions and profits.Results show that, the "leader" always gain more profits than the "follower" under both two decision-making models, and this has been confirmed as the "first mover advantage" by many researchers. Under the supplier-leader model, the supplier will improve the supply reliability level to a higher level than under the manufacturer-leader model, but a higher level of supply reliability does not mean higher profits of the whole supply chain, which is closely related to the cost to improve reliability; in addition, although the leader in the supply chain will gain higher profits, but for the whole supply chain, there is not a decision-making model to ensure that can guarantee more profits under any circumstances, it’s also related to the supplier’s initial supply reliability and reliability enhancement cost. On coordination problem, in the supplier- leader model, the supply chain can realize coordination when the cost to improve supply reliability is small enough and revenue sharing ratio is in a certain range, but the condition to make supply chain coordination under the manufacturer-leader model is hard to obtain. At last, when the initial supply reliability information is asymmetric, screening contract can inspire the supplier to choose the payment that is consistent with their true initial reliability and the reliability enhancement level accordingly; meanwhile, the supply reliability can be nearly improved to the same level as in the centralized system, but the profits of suppliers is compressed too small.