A Kind of Supplier Relationship Management Mechanism with Stock-Outs Compensation in E-Commerce

In supply chain circumstance, production, selling and after service of the product is fulfilled by all the members of supply chain. Therefore, the buyer-supplier relationship will affect the operation efficiency of complete supply chain system. However, the ubiquitous phenomenon on stock-outs, especially in e-commerce, will greatly affect the buyer-supplier relationship because the lost resulted by stock-outs is usually afforded by the buyer, such as the decrease of sales, alteration cost, the damage on fame, etc. In this paper, we propose that supplier should make some compensation proportionally for buyer in case of stock-outs, so as to promote the collaboration and relationship between supplier and buyer. Then, a model of compensation for stock-outs of supplier relationship management (SRM) is established exploiting the principle of non-linear programming, and an optimal solution to order quantity is provided. Finally, the validity of the model is validated through a case study.