Essays on Quantitative Analysis of Supply Chain Structures, Contracts and Coordination

This thesis consists of three separate, but related, essays that deal with the topic of how supply chain structure as well as the use of contracts impact performance of a supply chain. The main focus is the analysis of behavior of indirect-sale supply chains in terms of relative bargaining power and decision rights of the participants. Modeling as Stackelberg games, this thesis explores the existence of Nash equilibriums and the issues surrounding supply chain coordination.

In Essay one, “The Role of Decision Structure in Supply Chain Coordination with Stochastic Demand”, the analysis focuses on how different supply chain structures affect the choice of contracts in coordination under a generalized setting in which more powerful agent does not necessarily assume the Stackelberg leadership. This study shows that an optimal coordinating contract is based not only upon the overstock liquidation advantage the supplier/retailer may have, but also upon the specific decision hierarchy in the supply chain.

In Essay two, “Supply Chain Performance with Power Imbalanced Suppliers”, studies the effects of product substitution when suppliers and retailers have an imbalance of decision making power. In particular, we address the questions of structure dominance and why certain supply chain power structures are more stable.

Finally, Essay three, “Supply Chain Coordination with Revenue Sharing Contract when Retailer Sells Store-Brand Products”, a retailer-dominated supply chain coordination problem is investigated when the retailer sells store-brand products. Among many insights developed, it follows that two-parameter revenue-sharing contracts are preferred to both wholesale-price contacts and one-parameter revenue-sharing contracts in supply chain coordination due to its flexibility in profit division.