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1872. Supply contracts with investment cost sharing under arbitrary bargaining powers
Invited abstract in session TC-49: Lot-sizing with game theory aspects, stream Lot Sizing, Lot Scheduling and Production Planning.
Tuesday, 12:30-14:00Room: M1 (building: 101)
Authors (first author is the speaker)
| 1. | Pyung-Hoi Koo
|
| Systems Management and Engineering, Pukyong National University | |
| 2. | YOUNG JIN KIM
|
| Systems Management and Engineering, Pukyong National University | |
| 3. | Chang Seong Ko
|
| Industrial and Management Engineering, Kyungsung University |
Abstract
In this study, we propose a novel coordinated supply contract scheme integrating bargaining power (BP) considerations with capacity planning. Our scheme empowers manufacturers to design supply contracts conducive to channel coordination under arbitrary BP scenarios. It comprises two supply contracts: capacity cost sharing (CCS) and surplus capacity compensation (SCC) contracts. In the CCS contract, the manufacturer shares a portion of the supplier's capacity investment cost in a revenue-sharing framework. Conversely, the SCC contract entails the supplier bearing the cost of unused capacity. These contracts incentivize the supplier to invest in production capacity in alignment with the overall supply chain capacity, regardless of the BP scenarios.
We demonstrate that our contract scheme can satisfy any BP structure. Specifically, the SCC contract facilitates channel coordination under higher supplier BP, while the CCS contract leads to coordination under lower supplier BP. We also analyze the interrelation between contract parameters for channel coordination and establish the relationship between bargaining power and optimal supply contracts. Our findings reveal that revenue sharing and capacity cost sharing fractions are positively proportional to each other in the coordinated CCS contract, and the compensation rate for the surplus capacity increases as capacity cost sharing rate increases to achieve a coordinated SCC contract.
Keywords
- Supply Chain Management
- Logistics
- Inventory
Status: accepted
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