Mean-variance analysis of supply chains under wholesale pricing and profit sharing schemes

Ying Wei, Tsan Ming Choi

Research output: Journal article publicationJournal articleAcademic researchpeer-review

135 Citations (Scopus)

Abstract

In this paper, we explore the use of a wholesale pricing and profit sharing scheme (WPPS) for coordinating supply chains under the mean-variance (MV) decision framework. We first analytically establish the necessary and sufficient conditions for coordinating the centralized supply chain by WPPS. We then show that there exists a unique equilibrium of the Stackelberg game with WPPS in the decentralized case. After that, we discuss the information asymmetric case in which the retailer can be benefited by pretending to be more risk averse. Finally, we propose a new measure for the manufacturer to prevent this cheating from happening. Insights are generated.
Original languageEnglish
Pages (from-to)255-262
Number of pages8
JournalEuropean Journal of Operational Research
Volume204
Issue number2
DOIs
Publication statusPublished - 16 Jul 2010

Keywords

  • Mean-variance analysis
  • Supply chain coordination
  • Supply chain management

ASJC Scopus subject areas

  • Modelling and Simulation
  • Management Science and Operations Research
  • Information Systems and Management

Cite this