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The Optimization Decisions of the Decentralized Supply Chain under the Additive Demand

  • Peng Ma
  • Haiyan Wang
Part of the Smart Innovation, Systems and Technologies book series (SIST, volume 10)

Abstract

The paper considers a two-stage decentralized supply chain which consists of a supplier and a retailer. Some optimization decisions are studied when the market demand is linear and additive. The optimization decisions include who should decide the production quantity, the supplier or retailer? What is the production-pricing decision? et al. The retailer’s share of channel cost is defined as the ratio of the retailer’s unit cost to the supply chain’s total unit cost. The relationship between the supply chain’s total profit and the retailer’s share of channel cost is established. The production-pricing decisions are obtained with the case that the supplier and retailer decide the production quantity, respectively. The results show that the total profit of decentralized supply chain is always less than that of the centralized supply chain, independent of the retailer’s share of channel cost. If the retailer’s share of channel cost is between \(\frac{1}{3}\) and \(\frac{1}{2}\), the supplier should decide the production quantity. If the retailer’s share of channel cost is between \(\frac{1}{2}\) and \(\frac{2}{3}\), the supplier should decide the production quantity.

Keywords

decentralized supply chain additive demand production-pricing decision optimal channel profit consignment contract 

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Copyright information

© Springer-Verlag Berlin Heidelberg 2011

Authors and Affiliations

  • Peng Ma
    • 1
  • Haiyan Wang
    • 1
  1. 1.Institute of Systems Engineering, School of Economics and ManagementSoutheast UniversityNanjingP.R. China

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