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Mathematical Problems in Engineering
Volume 2014, Article ID 854681, 10 pages
http://dx.doi.org/10.1155/2014/854681
Research Article

Coordination of Supply Chain with a Dominant Retailer under Demand Disruptions

1School of Economics and Management, Beijing University of Chemical Technology, Beijing 100029, China
2School of Science, Beijing University of Chemical Technology, Beijing 100029, China

Received 29 December 2013; Accepted 18 March 2014; Published 23 April 2014

Academic Editor: Chuangxia Huang

Copyright © 2014 Jian Li et al. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

Abstract

We develop a coordination model of a one-manufacturer multi-retailers supply chain with a dominant retailer. We consider the impact of a dominant retailer on the market retail price and his sales promotion opportunity and examine how the manufacturer can coordinate such a supply chain by revenue-sharing contract after demand disruptions. We address the following important research questions in this paper. (i) How do we design an appropriate revenue-sharing contract to coordinate the supply chain with a dominant retailer without demand disruptions? (ii) When demand is disrupted with variations in market scale and price sensitive coefficient, can the original contract still be valid? (iii) How do the demand disruptions affect the coordination mechanism under different disruption scenarios and how should the new contract change? Finally, we generate important insights by both analytical and numerical examples.