A note on “revenue-sharing vs. wholesale-price contracts in assembly systems with random demand”

Author

Hong Fu ; Yongkai Ma ; Xiaowo Tang

Author_Institution

Sch. of Manage. & Econ., Univ. of Electron. Sci. & Technol. of China, Chengdu, China

fYear

2015

fDate

22-24 June 2015

Firstpage

1

Lastpage

5

Abstract

Gerchak and Wang [Gerchak, Y., Wang, Y., 2004. Revenue-sharing vs. wholesale-price contracts in assembly systems with random demand. Production and Operations Management 13(1), 23-33] develop a buy-back contract to coordinate a decentralized push assembly system. However, there exists deficiency in their coordination contract, because, as shown in this note, the highest expected profit a supplier in the push system can get is negative in some cases. Thus, we develop a modified buy-back contract to coordinate the push system. We also show that the modified buy-back contract has sufficient flexibility to allocate the expected profit of the system and achieves Pareto improvements.

Keywords

Pareto optimisation; assembling; contracts; incentive schemes; production management; random processes; Pareto improvements; assembly systems; buy-back contract; coordination contract; decentralized push assembly system; modified buy-back contract; operations management; production management; random demand; revenue-sharing contracts; wholesale-price contracts; Assembly; Assembly systems; Contracts; Europe; Supply chains; Upper bound; assembly system; buy-back contract; coordination; random demand;

fLanguage

English

Publisher

ieee

Conference_Titel

Service Systems and Service Management (ICSSSM), 2015 12th International Conference on

Conference_Location

Guangzhou

Print_ISBN

978-1-4799-8327-8

Type

conf

DOI

10.1109/ICSSSM.2015.7170195

Filename

7170195