Performance of three-echelon supply chain under uncertainty: influence of contract sequence and individual rationality
Benchmarking: An International Journal
ISSN: 1463-5771
Article publication date: 14 February 2022
Issue publication date: 11 January 2023
Abstract
Purpose
In the paper, the authors study the simultaneous influence of incentive compatibility and individual rationality (IR) on a multi-echelon supply chain (SC) under uncertainty. The authors study the impact of contract sequence on coordination strategies of a serial three-echelon SC consisting of a supplier, a manufacturer and a retailer in an uncertain environment.
Design/methodology/approach
The authors develop a game-theoretic framework of a serial decentralized three-echelon SC. Under a decentralized setting, the supplier and the manufacturer can choose from two contract types namely, wholesale price (WP) and linear two-part tariff (LTT) and it leads to four different cases of contract sequence.
Findings
The study show that SC coordination is possible when both the supplier and the manufacturer choose LTT contract. This study not only identifies the influence of contract sequence on profit distribution among SC agents, but also establishes cut-off policies for all SC agents for each contract sequence. This study also examine the influence of chosen contract sequence on optimal profit distribution among SC agents.
Research limitations/implications
Three-echelon SC coordination under uncertain environment depends upon the contract sequence chosen by SC agents.
Practical implications
This study results will be helpful to managers of various SCs to take operational decisions under uncertain situations.
Originality/value
The main contribution of this study is that it explores the possibility of coordination by supply contracts for three-echelon SC in a fuzzy environment.
Keywords
Acknowledgements
The authors gratefully acknowledge the Editor of this journal and anonymous reviewers for valuable suggestions.
Citation
Gupta, R., Biswas, I., Mohanty, B.K. and Kumar, S. (2023), "Performance of three-echelon supply chain under uncertainty: influence of contract sequence and individual rationality", Benchmarking: An International Journal, Vol. 30 No. 1, pp. 149-179. https://doi.org/10.1108/BIJ-08-2021-0463
Publisher
:Emerald Publishing Limited
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