Study On The Combinations Of Push And Pull Contracts In A Dual-Product Supply Chain

Push and pull contracts are two widely used wholesale price contracts in the supply chain.With a push contract,the retailer needs to order the supply before the demand is realized,and the supplier produces according to the retailer's reservation.With a pull contract,the retailer does not need to order in advance and the supplier determines the production quantity of the product.After the demand realized,the retailer will order products from suppliers according to the market demand.Therefore,under a push contract,the inventory risk arising from the uncertainty of demand is entirely undertaken by the retailer;under a pull contract,the inventory risk is undertaken by the supplier.Previous researchers have studied push and pull contracts in the single product scenario.However,in reality,most supply chains usually produce and sell a variety of products,and these products can be substitutive or complementary with each other.In the case of multi-product supply chains,to find the optimal supply chain contract for a product,a firm needs to consider not only the product's own demand and production process,but also consider the impact of its substitutes and complementary products.This is not involved in previous researches.The author fills this gap by studying push and pull contracts in a supply chain which distributes two products to a market.In order to fill this gap,we consider a supply chain consisting of a single supplier and a single retailer,in which the supplier sells two products through the retailer to a market with uncertain demand.And there is a complementary or substitutive relationship between these two products.The trade of each product between the supplier and the retailer can use either a push or a pull contract,and thus four possible contract combinations,i.e.,(i)push&push,(ii)pull&pull,(iii)push&pull,and(iv)pull&push,may occur.By analyzing supply chain members' decision problems under these four possible combinations,we have some interesting results.First,it is not necessarily true that the sales of one product will increase the sales of its complements or decrease the sales of its substitutes.The common view will be reversed in some conditions,i.e.,the sales of one product can decrease with the demand of its complements or increase with the demand of its substitutes.Second,through numerical studies we find that the supplier will prefer a different combination of contracts for different conditions.In particular,when the two products are highly complementary,the supplier will prefer a "push&pull" or a "pull&push"combination;but for the moderate complementary case,a "push&push" or "pull&pull" combination will lead a higher profit for the supplier;when the two products are substitutes,supplier gets more profits under "push&pull" or "pull&push" than under "pull&pull" and "push&push",with an exception that contrary result turns out when the lower demand product has higher uncertainty.