Supply Chain Coordination Mechanism Analysis Under Supply Disruption And Demand Uncertainty

Nowadays the economy has come to the era of globalization. Global supply chain is faced with ever more serious risk of supply disruption and demand uncertainty. It is of significant importance to the modern enterprises to research how to coordinate supply chain decision under the two risks above so as to increase profit and consolidate relationship. It is already proved by many that supply chain contracts are effective tools to coordinate supply chain when there is no risk. However, it still need further discussion on whether supply chain contract can coordinate supply chain under the dual risk of supply disruption and demand uncertainty.This paper firstly studies the supply chain decision model under both supply disruption and demand uncertainty risk in which two cases including concentrate decision and separate decision are discussed. Results show that there is a unique solution of Nash equilibrium in the separate decision game. Through analysis it is seen that in the separate decision in supply chain, retailer and producer start from maximizing their respective own profit in decision making so that the total profit in supply chain decreases. Moreover, with the risk level of supply disruption being high, the profit of retailer is extremely low, resulting that the cooperation relationship of supply chain tends to break up.Secondly this paper mainly discussed how the buyback contract and revenue sharing contract coordinate the supply chain under the dual risk of supply and demand. The game models with the buyback contract and revenue sharing contract are respectively built and proved by reasoning that the supply decisions under both contracts each has a unique solution of Nash equilibrium in comparatively loose condition. Numerical analysis has proved that the two contracts can both raise the profit of retailer and producer to some extent and hence the goal of consolidate the cooperation relationship of supply chain under the risk of supply and demand.On the foundation above, this paper has compared and analyzed the pros and cons of buyback contract and revenue sharing contract when they respectively coordinate the supply chain while dealing with high risk of supply and demand. It has found that the two contracts have advantages respectively on raising the supply chain profit and consolidating the cooperation relationship of supply chain. Decision makers can select the proper mechanism of supply chain contract according to their own market environment.The research results of this paper are meaningful for the decision makers of when the supply chain is faced with supply disruption and demand uncertainty. It can provide some reference in academic research and practice in the field of supply chain coordination analysis under supply disruption and demand uncertainty.