Research Article
An Optimal Transaction Model of a Supply-Chain with Two Competing Suppliers in which a Retailer Does a Role of Mediator
Chung-Ang University
Chung-Ang University
Published: January 2019 · Vol. 48, No. 3 · pp. 853-876
DOI: https://doi.org/10.17287/kmr.2019.48.3.853
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Abstract
We analyze a supply-chain consists of two competing suppliers and one retailer whose role is mediating retail sale process for the suppliers such as Online-Shopping Malls or Home Shopping Networks. Two suppliers produce similar goods which are substitutional each other, and they are supposed to pay a certain portion of their sales revenue to the retailer depending on corresponding retail sales performance. In this case, the portions of sales revenue for each player in the supply-chain play a crucial role in determining the retail prices which need to be optimized to maximize the profit through the whole supply-chain. Since each player in the supply-chain has its own incentive scheme for setting its retail price as well, the level of portions of the sales revenue for the players should be decided considering those two factors simultaneously: maximizing the profit through the whole supply-chain and satisfying incentive compatibility to each player. We found that the incentive compatible scheme for the suppliers is completely different from retailer’s and they share no common ground at all except some particular situations. Therefore there is no possibility to devise any intermediate solutions between suppliers and a retailer through a negotiation process in terms of settling down the proportion level for each of them. As a result we propose to design a two-part tariff scheme which requires a secondary incentive scheme which adopts a fixed fee base paying system between the suppliers and a retailer.
