Sourcing and pricing strategy research of competition supply chain under supply disruption
Ling Hou1, Meng Li2, Dongyan Chen1
1Department of Applied Mathematics, Harbin University of Science and Technology, 150080, Harbin, China
2School of Management, Harbin Institute of Technology, 150001, Harbin, China
Under the environment of supply disruption, it is significant to study decision-making, because sourcing strategies of retailers impact the profit of the supply chain while the pricing strategies of suppliers affect all aspects of the supply chain. In this paper, the demand distribution function of each supply chain is obtained, which is based on the total demand of two supply chains with given distribution function, and the sourcing and pricing problems are obtained in supply chain network under the environment of supply disruption. In order to decompose the total demand with the given distribution function, customer choice theory is adopted to acquire the demand of each supply chain. By game theory and optimization theory, we obtain the sourcing strategies of two retailers and the pricing strategies of two suppliers in this system. Finally based on the assumption of a uniform demand distribution, the outcomes of the proposed models are demonstrated with a numerical example. The results show that when disruption probability or delivery cost are high, retailers will only order from the spot market although the spot market wholesale prices are a little high; but when the disruption probability is moderate or low, the retailer would rather place orders from suppliers. Specific purchasing method depends on the competition ability between suppliers.