Research On Supply Chain Coordination With Production Cost Reduction And Overconfident Retailer

Business environment becomes more complex and causes the supply chain members facing more uncertainties when making decisions.Therefore,positive actions and flexible response mechanisms are significant to adapt to the changing environment in supply chain management.In this paper,we develop the newsvendor model to explore the impact of the manufacture's cost reduction investment and retailer's overconfidence to ordering quantities.This paper also develops quick response mechanism to optimize the profit of supply chain.Firstly,this paper adds the manufacture's cost reduction investment and strategic consumer behavior to the classical newsvendor model to gain the optimal order plans in the centralized supply chain.Meanwhile,the impacts of the cost reduction and strategic consumer behavior have been discussed.Then this paper proposes buyback contract and revenue sharing contract to coordinate the decentralized supply chain.Secondly,because of the uncertain market demand and advance order mechanism,the retailer may make wrong estimation and inaccurate order decision.So this paper considers the overconfident retailer and cost reduction investment in the supply chain to discuss the optimal decisions.Finally,flexible production and ordering mechanisms are important in supply chain to cope with complex environment.This paper establishes quick response mechanism in supply chain which supposes the retailer making a second order if the demand is not satisfied after the first order.Meanwhile,the manufacture invests to reduce the cost of the product when the retailer reorders.And then this paper discusses the optimal order decisions and analyzes the impacts of quick response and manufacture's investment in supply chain.The results show that the manufacture's cost reduction investment can increase optimal order quantity to improve the profit of supply chain.When the retailer makes wrong estimation on the product demand,the retailer's overconfidence may decrease the supply chain profit.Moreover,two order opportunities mechanism can be better when facing changeable environment and more flexible to make ordering decisions.