NDLI: Supply-chain coordination with combined contract for a short-life-cycle product

Content Provider	IEEE Xplore Digital Library
Author	Bin Liu Jian Chen Sifeng Liu Rong Zhang
Copyright Year	1996
Abstract	A contract is a mechanism to realize the performance improvement of a supply-chain system or to achieve the perfect coordination of a supply-chain channel. This paper deals with the coordination issue of a selling channel for a short-life-cycle product. First, a new type of contract combining the return policy with markdown money according to the practice under which some companies sell their products with different marketing policies in different selling periods is designed. This case is illustrated using a stochastic dynamic-programming model. Then, the necessary condition to achieve channel coordination with this combined contract is derived; and given the scheme to allocate the coordination profit, the generalized method to find the optimal contract parameters is developed. Lastly, with analysis and simulations, it can be concluded that the supply-chain coordination with the single contract in literatures for two-period selling depends on the demand distribution and the cost structure of a system, but the combined contract that was designed depends only on the cost structure of a system. It can further be concluded that the combined contract can ensure channel coordination and arbitrarily allocate coordination profit, and that the combined contract is generalized with several classical contracts as its special examples. Furthermore, the supplier will become the active initiator of the combined contract under the high-risk setting because the combined contract can strengthen his status in the channel system and improve his performance.
Sponsorship	IEEE Systems, Man, and Cybernetics Society
Starting Page	53
Ending Page	61
Page Count	9
File Size	211351
File Format	PDF
ISSN	10834427
Volume Number	36
Issue Number	1
Language	English
Publisher	Institute of Electrical and Electronics Engineers, Inc. (IEEE)
Publisher Date	2006-01-01
Publisher Place	U.S.A.
Access Restriction	Subscribed
Rights Holder	Institute of Electrical and Electronics Engineers, Inc. (IEEE)
Subject Keyword	Contracts Supply chains Costs Globalization Environmental economics Stochastic processes Analytical models Technological innovation Humans supply-chain coordination Combined contract dynamic-programming model short life cycle simulation
Content Type	Text
Resource Type	Article
Subject	Control and Systems Engineering Information Systems Electrical and Electronic Engineering Human-Computer Interaction Computer Science Applications Software

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