Supply Chain Commitment Contract Model Based on Uncertainty Theory under Uncertain Market Information
ABSTRACT
Based on the uncertainty theory, market demand information updating as the background, we study the coordination and optimization problem of three-stage supply chain in this paper. In half a asymmetric market information, participants are risk neutral; under the situation of the manufacturers and wholesalers having twice pre-season decision-making opportunity, wholesalers can be replenished in the season; manufacturers join the lowest supply contract of commitment: manufacturers for exchanging the information that they cannot get directly from the market will promise wholesalers to have a season lowest supply in pre-season. According to this contract, we establish optimization models of manufacturers and wholesalers respectively, and get the optimal strategy of supply chain members by analyzing the supply chain system. Finally, by giving a numerical example and comparing the results with that under random circumstances, the result is reasonable.
Based on the uncertainty theory, market demand information updating as the background, we study the coordination and optimization problem of three-stage supply chain in this paper. In half a asymmetric market information, participants are risk neutral; under the situation of the manufacturers and wholesalers having twice pre-season decision-making opportunity, wholesalers can be replenished in the season; manufacturers join the lowest supply contract of commitment: manufacturers for exchanging the information that they cannot get directly from the market will promise wholesalers to have a season lowest supply in pre-season. According to this contract, we establish optimization models of manufacturers and wholesalers respectively, and get the optimal strategy of supply chain members by analyzing the supply chain system. Finally, by giving a numerical example and comparing the results with that under random circumstances, the result is reasonable.
Cite this paper
Cui, Y. , Zhang, X. and Lu, X. (2015) Supply Chain Commitment Contract Model Based on Uncertainty Theory under Uncertain Market Information. Applied Mathematics, 6, 1727-1739. doi: 10.4236/am.2015.610153.
Cui, Y. , Zhang, X. and Lu, X. (2015) Supply Chain Commitment Contract Model Based on Uncertainty Theory under Uncertain Market Information. Applied Mathematics, 6, 1727-1739. doi: 10.4236/am.2015.610153.
References
[1] Liu, B. (2007) Uncertainty Theory. 2nd Edition, Spring-Verlag, Berlin.
http://dx.doi.org/10.1007/978-3-540-73165-8_5 [2] Li, X. and Liu, B. (2009) Hybrid Logic and Uncertain Logic. Journal of Uncertain Systems, 3, 83-94. [3] Liu, Y.H. (2013) Uncertain Random Variables: A Mixture of Uncertainty and Randomness. Soft Computing, 17, 625-634.
http://dx.doi.org/10.1007/s00500-012-0935-0 [4] Edgeworth, F.Y. (1888) The Mathematical Theory of Banking. Journal of Royal Statistical Society, 51, 113-127. [5] Gallego, G. and Moon, I. (1993) The Distribution Free Newsboy Problem: Review and Extensions. The Journal of the Operational Research Society, 44, 825-834.
http://dx.doi.org/10.1057/jors.1993.141 [6] Whitin, T.M. (1955) Inventory Control and Price Theory. Management Science, 2, 61-68.
http://dx.doi.org/10.1287/mnsc.2.1.61 [7] Schweitzer, M.E. and Cachon, G.P. (2000) Decision Bias in the Newsvendor Problem with a Known Demand Distribution: Experimental Evidence. Management Science, 46, 404-420.
http://dx.doi.org/10.1287/mnsc.46.3.404.12070 [8] Porteus, E.L. (1990) Foundations of Stochastic Inventory Theory. In: Heyman, D.P. and Sobel, M.J., Eds., Handbooks in Operations Research and Management Science, Vol. 2, Ch. 12, Elsevier Science Publishers, Amsterdam, 605-652. [9] Silver, E.A., Pyke, D.F. and Peterson, R. (1998) Inventory Management and Production Planning and Scheduling. 3rd Edition, John Wiley, New York. [10] Malone, T.W. and Crowstom, K. (1994) The Interdisciplinary Study of Coordination. ACM Computing Surveys, 16, 87-119. [11] Hoppe, R.M. (2001) Outlining a Future of Supply Chain Management-Coordinated Supply Network. Master’s Thesis, Civil Engineering Tufts University, Medford. [12] Cachon, G.P. (2001) Supply Chain Coordination with Contracts. In: Graves, S.C. and de Kok, A.G., Eds., Handbooks in Operations Research and Management Science: Supply Chain Management, Vol. 11, Elsevier, Amsterdam. [13] Wei, Y. and Choi, T.-M. (2010) Mean-Variance Analysis of Supply Chains under Wholesale Pricing and Profit Sharing Schemes. European Journal of Operational Research, 204, 255-262.
http://dx.doi.org/10.1016/j.ejor.2009.10.016 [14] Cai, J.H. (2011) Supply Chain Management under Uncertainty Government. Technology Press, Beijing. [15] Wang, Y.J. (2001) Practical Modeling in Supply Chain Management and Data Mining. Tsinghua University Press, Beijing. [16] Baker, G., Gibbons, R. and Murphy, K.J. (1994) Subjective Performance Measures in Optimal Incentive Contracts. The Quarterly Journal of Economics, 109, 1125-1156.
http://dx.doi.org/10.2307/2118358 [17] Tunca, T.I. and Zenios, S.A. (2006) Supply Auctions and Relational Contracts for Procurement. Manufacturing and Service Operations Management, 8, 43-67.
http://dx.doi.org/10.1287/msom.1060.0097 [18] Dyrer, J.H. and Chu, W. (2003) The Role of Trustworthiness in Reducing Transaction Costs and Improving Performance: Empirical Evidence from the United States, Japan, and Korea. Organization Science, 1, 57-68.
http://dx.doi.org/10.1287/orsc.14.1.57.12806 [19] Sun, Y.X. and Yu, M.J. (2010) Relational Contract Research Review. Academic Communication, 8, 117-123. [20] Zhao, H.P., Feng, Y.C., Yao, L.G. and Jiang, J.-D. (2005) An Analysis on Supply Chain Coordination with Target Quantity Rebate. Systems Engineering, 23, 51-55. [21] Li, Y. (2012) Research on Dynamics of Relationship Contract Governance. Inquiry into Economic Issues, 8, 90-94. [22] Wu, D.Y. (2013) The Impact of Repeated Interactions on Supply Chain Contracts: A Laboratory Study. International Journal of Production Economics, 142, 3-15. [23] Spengler, J. (1950) Vertical Integration and Antitrust Policy. Political Economy, 58, 347-352.
http://dx.doi.org/10.1086/256964 [24] Govindan, K., Diabat, A. and Popiuc, M.N. (2012) Contract Analysis: A Performance Measures and Profit Evaluation within Two-Echelon Supply Chains. Computers Industrial Engineering, 63, 58-74.
http://dx.doi.org/10.1016/j.cie.2012.01.010 [25] Helper, S. (1991) How Much Has Really Changed between US Manufacturers and Their Suppliers. Sloan Management Review, 32, 15-28. [26] Dyers, H. and Ouchi, W. (1993) Japanese-Style Partnerships: Giving Companies a Competitive Edge. Sloan Management Review, 35, 51-64. [27] Helper, S. and Sako, M. (1995) Supplier Relations in Japan and the United States: Are the Converging. Sloan Management Review, 36, 77-85. [28] Durango-Cohen, E.J. and Yano, C.A. (2006) Supplier Commitment and Production Decisions under a Forecast Commitment Contract. Management Science, 52, 54-67.
http://dx.doi.org/10.1287/mnsc.1050.0471 [29] Tsay, A. (1999) The Quantity Flexibility Contract and Supplier-Customer Incentives. Management Science, 45, 1339-1358.
http://dx.doi.org/10.1287/mnsc.45.10.1339 [30] Tsay, A. and Lovejoy, W.S. (1999) Quantity Flexibility Contracts and Supply Chain Performance. Journal of Manufacturing and Service Operation Management, 1, 89-101.
http://dx.doi.org/10.1287/msom.1.2.89 [31] Eppen, G. and Iyer, A. (1997) Backup Agreements in Fashion Buying—The Value of Upstream Flexibility. Management Science, 43, 1469-1484.
http://dx.doi.org/10.1287/mnsc.43.11.1469 [32] Bassok, Y., Srinivasan, R., Bixby, A. and Wiesel, H. (1997) Design of Component Supply Contracts with Commitment Revision Flexibility. IBM Journal of Research and Development, 41, 693-702.
http://dx.doi.org/10.1147/rd.416.0693 [33] Sassok, Y. and Anupindi, R. (1997) Analysis of Supply Contracts with Commitments and Flexibility. Northwestern University, Evanston. [34] Anupindi, R. and Bassok, Y. (1998) Approximations for Multiproduct Contracts with Stochastic Demands and Business Volume Discounts: Single Supplier Case. IIE Transactions, 30, 723-734.
http://dx.doi.org/10.1080/07408179808966518
[1] Liu, B. (2007) Uncertainty Theory. 2nd Edition, Spring-Verlag, Berlin.
http://dx.doi.org/10.1007/978-3-540-73165-8_5 [2] Li, X. and Liu, B. (2009) Hybrid Logic and Uncertain Logic. Journal of Uncertain Systems, 3, 83-94. [3] Liu, Y.H. (2013) Uncertain Random Variables: A Mixture of Uncertainty and Randomness. Soft Computing, 17, 625-634.
http://dx.doi.org/10.1007/s00500-012-0935-0 [4] Edgeworth, F.Y. (1888) The Mathematical Theory of Banking. Journal of Royal Statistical Society, 51, 113-127. [5] Gallego, G. and Moon, I. (1993) The Distribution Free Newsboy Problem: Review and Extensions. The Journal of the Operational Research Society, 44, 825-834.
http://dx.doi.org/10.1057/jors.1993.141 [6] Whitin, T.M. (1955) Inventory Control and Price Theory. Management Science, 2, 61-68.
http://dx.doi.org/10.1287/mnsc.2.1.61 [7] Schweitzer, M.E. and Cachon, G.P. (2000) Decision Bias in the Newsvendor Problem with a Known Demand Distribution: Experimental Evidence. Management Science, 46, 404-420.
http://dx.doi.org/10.1287/mnsc.46.3.404.12070 [8] Porteus, E.L. (1990) Foundations of Stochastic Inventory Theory. In: Heyman, D.P. and Sobel, M.J., Eds., Handbooks in Operations Research and Management Science, Vol. 2, Ch. 12, Elsevier Science Publishers, Amsterdam, 605-652. [9] Silver, E.A., Pyke, D.F. and Peterson, R. (1998) Inventory Management and Production Planning and Scheduling. 3rd Edition, John Wiley, New York. [10] Malone, T.W. and Crowstom, K. (1994) The Interdisciplinary Study of Coordination. ACM Computing Surveys, 16, 87-119. [11] Hoppe, R.M. (2001) Outlining a Future of Supply Chain Management-Coordinated Supply Network. Master’s Thesis, Civil Engineering Tufts University, Medford. [12] Cachon, G.P. (2001) Supply Chain Coordination with Contracts. In: Graves, S.C. and de Kok, A.G., Eds., Handbooks in Operations Research and Management Science: Supply Chain Management, Vol. 11, Elsevier, Amsterdam. [13] Wei, Y. and Choi, T.-M. (2010) Mean-Variance Analysis of Supply Chains under Wholesale Pricing and Profit Sharing Schemes. European Journal of Operational Research, 204, 255-262.
http://dx.doi.org/10.1016/j.ejor.2009.10.016 [14] Cai, J.H. (2011) Supply Chain Management under Uncertainty Government. Technology Press, Beijing. [15] Wang, Y.J. (2001) Practical Modeling in Supply Chain Management and Data Mining. Tsinghua University Press, Beijing. [16] Baker, G., Gibbons, R. and Murphy, K.J. (1994) Subjective Performance Measures in Optimal Incentive Contracts. The Quarterly Journal of Economics, 109, 1125-1156.
http://dx.doi.org/10.2307/2118358 [17] Tunca, T.I. and Zenios, S.A. (2006) Supply Auctions and Relational Contracts for Procurement. Manufacturing and Service Operations Management, 8, 43-67.
http://dx.doi.org/10.1287/msom.1060.0097 [18] Dyrer, J.H. and Chu, W. (2003) The Role of Trustworthiness in Reducing Transaction Costs and Improving Performance: Empirical Evidence from the United States, Japan, and Korea. Organization Science, 1, 57-68.
http://dx.doi.org/10.1287/orsc.14.1.57.12806 [19] Sun, Y.X. and Yu, M.J. (2010) Relational Contract Research Review. Academic Communication, 8, 117-123. [20] Zhao, H.P., Feng, Y.C., Yao, L.G. and Jiang, J.-D. (2005) An Analysis on Supply Chain Coordination with Target Quantity Rebate. Systems Engineering, 23, 51-55. [21] Li, Y. (2012) Research on Dynamics of Relationship Contract Governance. Inquiry into Economic Issues, 8, 90-94. [22] Wu, D.Y. (2013) The Impact of Repeated Interactions on Supply Chain Contracts: A Laboratory Study. International Journal of Production Economics, 142, 3-15. [23] Spengler, J. (1950) Vertical Integration and Antitrust Policy. Political Economy, 58, 347-352.
http://dx.doi.org/10.1086/256964 [24] Govindan, K., Diabat, A. and Popiuc, M.N. (2012) Contract Analysis: A Performance Measures and Profit Evaluation within Two-Echelon Supply Chains. Computers Industrial Engineering, 63, 58-74.
http://dx.doi.org/10.1016/j.cie.2012.01.010 [25] Helper, S. (1991) How Much Has Really Changed between US Manufacturers and Their Suppliers. Sloan Management Review, 32, 15-28. [26] Dyers, H. and Ouchi, W. (1993) Japanese-Style Partnerships: Giving Companies a Competitive Edge. Sloan Management Review, 35, 51-64. [27] Helper, S. and Sako, M. (1995) Supplier Relations in Japan and the United States: Are the Converging. Sloan Management Review, 36, 77-85. [28] Durango-Cohen, E.J. and Yano, C.A. (2006) Supplier Commitment and Production Decisions under a Forecast Commitment Contract. Management Science, 52, 54-67.
http://dx.doi.org/10.1287/mnsc.1050.0471 [29] Tsay, A. (1999) The Quantity Flexibility Contract and Supplier-Customer Incentives. Management Science, 45, 1339-1358.
http://dx.doi.org/10.1287/mnsc.45.10.1339 [30] Tsay, A. and Lovejoy, W.S. (1999) Quantity Flexibility Contracts and Supply Chain Performance. Journal of Manufacturing and Service Operation Management, 1, 89-101.
http://dx.doi.org/10.1287/msom.1.2.89 [31] Eppen, G. and Iyer, A. (1997) Backup Agreements in Fashion Buying—The Value of Upstream Flexibility. Management Science, 43, 1469-1484.
http://dx.doi.org/10.1287/mnsc.43.11.1469 [32] Bassok, Y., Srinivasan, R., Bixby, A. and Wiesel, H. (1997) Design of Component Supply Contracts with Commitment Revision Flexibility. IBM Journal of Research and Development, 41, 693-702.
http://dx.doi.org/10.1147/rd.416.0693 [33] Sassok, Y. and Anupindi, R. (1997) Analysis of Supply Contracts with Commitments and Flexibility. Northwestern University, Evanston. [34] Anupindi, R. and Bassok, Y. (1998) Approximations for Multiproduct Contracts with Stochastic Demands and Business Volume Discounts: Single Supplier Case. IIE Transactions, 30, 723-734.
http://dx.doi.org/10.1080/07408179808966518