VMI & TPL supply chain coordination based on evolutionary game

Abstract

Contraposing the three-level vendor managed inventory & third party logistics (VMI & TPL) supply chain composed of single vendor, single TPL and single retailer, this paper introduces the buyback contract model and conducts evolutionary game theory-based comparative analysis on the evolutionary stable strategies of supply chain before and after the introduction of the model. According to the result of the evolutionary game between vendor and retailer, the two parties in the original VMI & TPL supply chain either adopts the strategy of (cooperation, cooperation) or (non-cooperation, non-cooperation), leaving the supply chain in an unstable state; after the introduction of the buyback contract model, the supply chain profit is redistributed, and the two parties turn to the strategy of (cooperation, cooperation). In other words, the introduction of the buyback contract model improves the coordination and stability of the VMI & TPL supply chain.