The Ratio of Supply Chain Integrated and Profit Distribution between Nodes with Production Rigidity and Stochastic Price


There is such type supply chain, such as pigs upstream supply chain, with Production rigidity and price stochastic. For suppliers, it may create a dilemma that on one side is the price falling and on the other hand is the raw materials were manufactured in an endless stream. In order to avoid big losses, suppliers must make decision whether to take supply chain integration strategy. Following conclusion be made by study. First, in the decentralized decision-making form, supplier have seller's market. It will enter into the downstream, take the supply chain integration strategy, and will change raw material prices to adjust the proportion of manufacturer purchase for raw materials, and adjust their own profits. And bear the benefits and risk for price change. But manufacturers are in a passive position, their profit wave small. Second, if the opportunity cost for supplier to enter into manufacturing is very high, it will not enter the downstream, but to encourage manufacturers to buy all raw materials; and if even the entering cost is zero, in order to avoid the risks of stochastic demand, Suppliers also won't choose to manufacture all by themselves. And if the prices changes greater, supply chain coordination will bring much more profit. The supplier will have stronger motivate to coordinate the supply chain.

  • Abstract
  • Keywords
  • Introduction
  • Symbols Set
  • Basic Model in Separate Decision Conditions
  • Product Price Change and the Supply Chain Integration Ratio
  • Numerical Experiments
  • Conclusion
  • Acknowledgments
  • References

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