ENTRY GAME IN SUPPLY CHAINS WITH YIELD UNCERTAINTY

Yang Peng, Xiaoming Yan, Ang Zhou, Tai Chiu Edwin Cheng, Min Ji

Research output: Journal article publicationJournal articleAcademic researchpeer-review

2 Citations (Scopus)

Abstract

Yield uncertainty presents great challenges to supply chain management, which affects market supply and thus the profits of all the supply chain parties. In the context of a supply chain comprising a retailer and multiple potential suppliers with random yields, we examine the impact of yield uncertainty on the suppliers’ entry decisions, and how it affects the retailer's profit and consumer surplus. We find that yield uncertainty initially increases the number of suppliers entering the market, then decreases, and it is negatively correlated with consumer surplus. We also analyze how the retailer's purchasing price strategy influences the suppliers’ decisions to enter the market. We find that retailer subsidies can improve the performance of and coordinate the supply chain. In addition, the subsidy contract is in the forms of production subsidy and surplus subsidy when the suppliers do not make and make production decisions, respectively.

Original languageEnglish
Pages (from-to)4989-5010
Number of pages22
JournalJournal of Industrial and Management Optimization
Volume19
Issue number7
DOIs
Publication statusPublished - Jul 2023

Keywords

  • contract
  • multiple sourcing
  • production decision
  • random yield
  • Supply chain

ASJC Scopus subject areas

  • Business and International Management
  • Strategy and Management
  • Control and Optimization
  • Applied Mathematics

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