Supply chain coordination under buyback contract with multiple newsvendors

Abstract

For two stage supply chain with multiple competing newsvendors which faces stochastic market demand, the coordination may be broken off by intervention events. Using buyback contract, the impact of demand disruptions upon the supply chain coordination is studied. When market scale change is small, keeping the original production plan can achieve the supply chain coordination; When market scale changes significantly by the intervention event, adjusting the production plan become necessary. The optimal strategy for supply chain to the interventions by buyback is presented, and an adjusted buyback contract which has anti-intervention ability is proposed. Numerical examples are made to illustrate the effectiveness of the optimal strategy. © Springer-Verlag Berlin Heidelberg 2012.