Competition and cooperation in a single-retailer two-supplier supply chain with supply disruption

Jian Li, Shouyang Wang, Edwin Tai Chiu Cheng

Research output: Journal article publicationJournal articleAcademic researchpeer-review

179 Citations (Scopus)


Many retailers diversify their supply disruption risk by sourcing from multiple suppliers. While a retailer's sourcing strategy impacts the profit of the supply chain, the pricing strategies of suppliers influence all aspects of the supply chain. In this paper we investigate the sourcing strategy of a retailer and the pricing strategies of two suppliers in a supply chain under an environment of supply disruption. We characterize the sourcing strategies of the retailer in a centralized and a decentralized system. We derive a sufficient condition for the existence of an equilibrium price in the decentralized system when the suppliers are competitive. Based on the assumption of a uniform demand distribution, we obtain an explicit form of the solutions when the suppliers are competitive. Finally we devise a coordination mechanism to maximize the profits of both suppliers.
Original languageEnglish
Pages (from-to)137-150
Number of pages14
JournalInternational Journal of Production Economics
Issue number1
Publication statusPublished - 1 Mar 2010


  • Cooperation game
  • Non-cooperation game
  • Supply chain coordination
  • Supply disruption

ASJC Scopus subject areas

  • General Business,Management and Accounting
  • Economics and Econometrics
  • Management Science and Operations Research
  • Industrial and Manufacturing Engineering


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