| Abstract | In this dissertation, we consider a supply chain consisting of one supplier who provides a short life-cycle product with high volatile demand to either single or multiple retailers. The retailers reserve commitment quantities to the supplier before realizing demand. The supplier then makes decision on the capacity and reserved supply quantities before receiving actual orders from the retailers. Due to high uncertainty in demand, the retailers may inflate the commitment level to induce the supplier to invest more in capacity, while the supplier may not build enough capacity as he lacks confidence in the commitment levels of the retailers. The conflict between the supplier and retailers may lead to a poor performance of the supply chain. Motivated by this problem, we develop a flexible commitment contract model - a hybrid contract between the quantity flexibility contract and commitment contract with two-way penalties. In the proposed contract, three types of penalty, namely, under purchase, over purchase and under supply penalties are applied to either the supplier or the retailers.
In the first part of the dissertation, we develop a flexible commitment contract for a single supplier - single retailer supply chain. We firstly determine the profit functions of the supplier and the retailer, and then analyze the optimal reserved supply quantity of the supplier at a given commitment level of the retailer as well as the optimal commitment quantity of the retailer under the assumption that information about the reserved supply quantity is known. Guidelines for the supplier to decide on reserved supply quantity and retailer to decide on commitment quantity are then derived through scenario analysis. We examine also the conditions at which both the supplier‟s and the retailer‟s decisions are correct which might help to coordinate the supply chain.
In the second part of the dissertation, we focus on the capacity allocation decision of the supplier to multiple retailers. In this problem, the supplier‟s capacity is limited, and it cannot be expanded immediately, therefore, the capacity allocation decision should be examined to help allocate reserved supply quantities to multiple retailers. Under the mechanism of the proposed flexible commitment contract with two-way penalties, we derive optimal allocation decisions on reserved supply quantities of the supplier to multiple retailers in both decentralized and centralized supply chains. Numerical analyses are then conducted to illustrate the application of the proposed contract for both single supplier- single retailer and single supplier- multiple retailers supply chains. The effects of under supply, over purchase, under purchase penalties and other contract parameters are investigated. The contract efficiency is also examined through numerical analysis and the results show that the proposed contract can help reach a very high efficiency in term of coordination. |