Supply Chain Coordination with Wholesale Contract in an Uncertain Environment

Subject Areas : Stochastically Optimization

Alireza Ghaffari-Hadigheh ^{1 *} , Nassim Mongeri ²

1 - Department of Applied Mathematics, Azarbaijan Shahid Madani University, Tabriz, Iran
2 - Department of Applied Mathematics, Azarbaijan Shahid Madani University, Tabriz, Iran

Received: 2022-10-08 Accepted : 2024-10-22 Published : 2024-11-05

Keywords: Supply chain, Coordinating contract, Wholesale contract, Uncertainty theory,

Abstract :

Supply chain coordination is one of the most recently studied fields. One of the coordination contracts is the wholesale contract that aims to balance the order quantity by offering a lower wholesale price to the retailer. The primary indeterminate player in this contract is the demand. The goal is to find the order amount so that both parties in the channel are satisfied with a reasonable profit concerning the proposed price. When a new product is presented to the market, the main challenge would be a sensible demand prediction such that either stock over or shortage stays under a moderate level. In such a new product, either there is insufficient sample space to be dealt with in probability theory, or the existing data for similar products does not apply to this new case. Referring to an expert would be an appropriate approach in this situation. Uncertainty theory is one of the mathematical paradigms which deals with this problem well. Using this paradigm, we assume that the demand is an uncertain variable with known uncertainty distribution. We mainly consider the linear uncertain demand and investigate optimal policy for both parties with and without coordination. An illustrative example verifies the proposed approach.

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