Contracts Design Of Supply Chain Under Unreliable Supply

The development of economic globalization makes the market competition environment increasingly complex,more and more uncertain factors in the supply chain,a variety of frequent incidents,which exacerbates the risk of supply disruption.And private information is not shared among members of the supply chain,leading to market failure and inefficient supply chain operations.The market appeal of various malpractice makes the mitigation of risk,information sharing imminent.This paper uses a dual source procurement strategy to mitigate the risk of supply disruption.Assuming that supply reliability information is known,Contracts design is considered for a two-stage supply chain with a manufacturer and two suppliers.The supplier is treated as a main supplier subject to random distribution with supply disruptions,and the other supplier is a secondary supplier with all-or-nothing type of supply availability structure.Based on profit maximization,the dynamic programming model is established of a two-stage game composed of signing contracts stage and execution stage,the manufacturer's optimal contract design is achieved.The manufacture makes a decision among signing contracts with only one supplier,both suppliers or neither according to the retail price of products,and then the suppliers decides the optimal production scale.To solve the problem of information asymmetry,Contracts design is considered for a two-stage supply chain consisting of a supplier and a manufacturer under random demand.We presume there are two types of suppliers in the market: high reliability and low reliability,and reliability information is known to itself.We adopt an incentive compatibility mechanism and revelation principle,and establish a dynamic programming model of a two-stage game,and finally reach a separating equilibrium.We also get the optimal sourcing decision of the manufacturer and the optimal production scale in the case of symmetric and asymmetric information,and analyze the value of reliability information.It is investigated that: negative correlation is existed between the optimal production scale with per unit of the cost of production,and with per unit of variable payment and punishment cost;The manufacturer's order quantity presents a positive correlation withthe supplier's reliability;The supplier's penalty cost is negatively correlated with its own reliability.The order quantity from the supplier of high reliability is always more than the one from the supplier of low reliability no matter whether the information is known to the manufacturer.The information value is positive correlation of the gap of the reliability level of two kinds of suppliers and the probability of a supplier being of high-type.There is a reverse relationship between the information value and the probability of a supplier being of low-type.