Supply-chain ripple effect under duopoly retailers' operating uncertainty with two different contracts

Abstract

In the past few years, the problem of supply chain uncertainty attracts more and more people's attention. However, people place almost all their focus on demand and supply uncertainties and seldom study operating uncertainties of supply chain. This paper investigates the problem of operating uncertainty from the aspect of oligarch competition. First, we examine the supply chain, one supplier and two competing retailers, coordination mechanism with a revenue sharing contract and a quantity-discount contract under a deterministic environment. Second, we assume the retailers' uncertain behaviors, price competition, occur. Then, we discuss the supply-chain ripple effect due to duopoly retailers' price competition with the two different contracts. By comparing the intensity of the supply-chain ripple effect with the different contracts, we find out that the quantity-discount contract can be well suited to the uncertain environment. © 2013 Springer-Verlag Berlin Heidelberg.