The Impact Of Retailer Competition And Sales Effort On Turn-and-earn Allocation Mechanism

In a two-stage supply chain composed of one supplier and multiple retailers,when the social demand or the external environment changes,the supplier’s production is unable to meet the market’s need due to the certain limitation of supplier’s production capacity.At this point,the supplier need to formulate a reasonable allocation mechanism,to distribute the limited production to downstream retailers,and strive to improve operational efficiency of the supply chain by allocation settings.Turn-and-earn allocation mechanism,in the existing allocations,can stimulate the retailers’ sale by the setting of two stages,has been widely used in the automobile industry.This paper set the turn-and-earn allocation mechanism as the research object,and explore the effects of sales effort around the huge pressure to the retailers caused through the process of allocation.Considering the complexity of the market,we analyzed it under two kinds of circumstances where there is no competition between retailers and there is competition,in different circumstances,we researched the different strategies of the supplier and retailers.Firstly,we studied turn-and-earn allocation mechanism when there is no competition between retailers,respectively in the different situation whether consider sales effort.Without considering the sales efforts,the equilibrium of turn-and-earn was concluded,which was compared with fixed allocation;Without considering the sales efforts,we got the condition that turn-and-earn is adverse to retailers through the comparison of the sales effort the supplier and retailers devoted and the profits they got.Under this circumstance,the supplier can transfer part of profits to retailers to reach the balance between both sides,and it was concluded that the satisfy conditions needed for the part of the profits.Secondly,we discussed turn-and-earn under the background of retailers’ competition,also it was divided into two parts that whether there exists sales effort.When sales efforts was not considered,we mainly studied the influence of the cooperation strategy of the weak retailers in competitive environment on turn-and-earn.The comparison of profit and sales quantity before and after cooperation,suggested that the cooperation of retailers will change the structure of supply chain,to reduce their own sales pressure and increase their profit.When sales efforts was considered,we combined the above study,discussed the supplier’s coordination strategy and retailers’ cooperation strategy,and gave the conditions the policy needs to meet.Lastly,we verified the main conclusion by numerical study,and combined the theory in this paper with practical application through the explanation of numerical examples’phenomenon.In this paper,the turn-and-earn allocation mechanism is expanded to a new application field,at the same time,certain guiding basis is provided for the retailers and suppliers’ measures in different circumstances.