Supply-chain ripple effect under operating uncertainty: Oligarch competition

Most of studies of supply-chain uncertainty just consider the demand or supply. This paper adds to this growing literature from operating uncertainty aspect by investigating two-stage supply chain system with one supplier and duopoly manufacturers, which supplies substitutable products. Above all, we introduce a quantity discount pricing model to address equilibrium of supply chain coordination. Then, considering the manufacturers´ price strategy changing to compete with the other, we discuss the intensity of supply-chain ripple effect under the different ranges of quantity discount rate. We find that the supply-chain ripple effect cannot be eliminated even though supply chain is coordinated. Furthermore, our model shows, in given market environment, when coordinated condition meets, the intensity of supply-chain ripple effect can be greater than uncoordinated. In the end, an optimization model to cope with the ripple effect for dominate firm of the supply chain is lodged.