Coordination Mechanism Of Supply Chain Considering Bullwhip Effect Under Digital Technologies

Bullwhip effect and stochastic demand coexist which is commonly observed in supply chain operation management.With the increasingly fierce market competition,modern enterprises want to reduce their own stock so as to save the cost and to meet the needs of their consumers to obtain greater profits at the same time.However,due to the existence of uncertain demand and bullwhip effect,the demand information in the downstream will be distorted when it is transmitted along the supply chain to the upstream,either further enlarged or further reduced,which lead to an increase in inventory or in out of stock.Fortunately,in recent years,with the development of blockchain,cloud computing,big data and other digital technologies,this problem in supply chain operation and management has the possibility of alleviating.The application of digital technologies will increase extra investment.In addition,in practice,all participants in the supply chain determine the application degree of digital technologies according to the principle of maximizing their own profits.These reasons will lead to the actual application degree of digital technologies in the supply chain may be very low,which cannot achieve the maximization of the overall interests of the supply chain.Therefore,it is necessary to improve the application degree of digital technologies in the supply chain through coordination,so as to improve the performance of the supply chain.In this paper,we consider a one-supplier-one-buyer supply chain and model the supply chain with cost-sharing contract and cost-revenue-sharing contract with digital technologies and stochastic demand under digital technologies.The study results reveal that: First,when digital technologies is adopted,retailer’s order quantity and supplier’s production will decrease which is closer to the real market demand.The retailer and supplier’s expected-degree of application of digital technologies is not the same.Their cooperation is actually the result of commercial compromise(the application degree of that digital technologies is based on who wants to use it lower).Second,we prove that both cost-sharing contract and cost-revenue-sharing contract can make the application level of digital technologies that retailer and supplier hope to use approximate to the same,and can improve the application level of the one who originally expected to apply lower.This will improve the application level of digital technologies of the supply chain.Third,cost-revenue-sharing contract has a wider scope of application comparing with the benchmark supply chain model where only consider cost-sharing contract,i.e.better coordination effect.Fourth,the performance of supply chain is not only better than the decentralized decision-making but also the centralized decision-making under some conditions compare with the performance of each participant in supply chain before and after supply chain coordination.Finally,we validate our model by numerical simulation.