Quantity discount contracts for supply chain coordination under asymmetric information and disruptions

Abstract

The quantity discount contracts are investigated for a one-supplier-one-retailer supply chain with asymmetric information when the retailer's cost is disrupted. While the retailer's cost structure is asymmetric information, two all-unit quantity discount contract models, fixed expected-profit percentage discount (FEPD) and fixed wholesale-pricing percentage discount (FWPD) under asymmetric information are proposed in a regular scenario. When the retailer's cost distribution fluctuates due to disruptions, the optimal emergency strategies of supply chains are obtained under asymmetric information. Using numerical methods, the impact of cost disruptions on decisions about the regular wholesale price, discount wholesale price, order quantity and expected profits of the retailer, the supplier as well as the total system are analyzed. It is found that the FEPD policy is more robust and adaptable than the FWPD policy in disruption circumstances.