Supply chain channel coordination under sales rebate return policy contract using simulation optimization

    Authors

    M. Darayi; H. Eskandari;C. D. Geiger

    Comments

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    Abbreviated Journal Title

    Sci. Iran.

    Keywords

    Supply chain coordination; Return policy with sales rebate and penalty; contract; Simulation; Price- and effort- dependent demand SRP: Sales; Rebate and Penalty; RSRP: Return policy with Sales Rebate and Penalty; LRSRP: Limited return policy with Sales Rebate and Penalty; REVENUE-SHARING CONTRACT; COMPETITION; MANUFACTURER; SYSTEMS; DEMAND; PRICE; Engineering, Multidisciplinary

    Abstract

    This paper proposes a Stackelberg game-based approach for channel coordination for a supply chain consisting of one supplier and two competing retailers facing stochastic demand that is sensitive to both sales effort and retail price. In the proposed approach, the supplier, as the leader, defines the contract format and parameters, and the retailers determine the order quantity, retail price and sales effort. The literature primarily focuses on the design of the contract parameters to ensure channel coordination, whereas much less attention is given to the analysis of conditions supporting contract implementation. This study focuses on implementation of the Return policy with a Sales Rebate and Penalty (RSRP) contract as a coordination mechanism. The negotiation and trading procedure among supply chain members is modeled using a simulation optimization-based decision support tool. The possibility that retailers impose their own preferences that disturb channel coordination after signing the RSRP contract is analyzed, and a new Limited Return policy with a Sales Rebate and Penalty (LRSRP) contract, which helps the supplier guarantee channel coordination and control retailer decisions, is proposed. (C) 2014 Sharif University of Technology. All rights reserved.

    Journal Title

    Scientia Iranica

    Volume

    21

    Issue/Number

    6

    Publication Date

    1-1-2014

    Document Type

    Article

    Language

    English

    First Page

    2295

    Last Page

    2306

    WOS Identifier

    WOS:000349514800002

    ISSN

    1026-3098

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