Coordination of pricing, sourcing and product design decisions in a supply chain
Supply chain management is more than a movement advocated by a few pioneers today. It is a strategic as well as operational revolution for business operations. Better understanding of the underlying principles of supply chain scenarios helps the widely acceptance that coordination along supply chain links can achieve a win-win situation. In the meanwhile, the penetration of Internet and information technology into every corner of our life enables a large scale of interaction and cooperation between multiple business units and/or end consumers. Supply chain management has gone beyond the early stage when basic cases are discussed for pedagogical purpose. More realistic application scenarios are yet to be identified and investigated. Supply chain performance can be affected by a large set of factors. A variety of supply chain scenarios are in operation. This dissertation is intended to identify a number of typical application scenarios and focus on decision issues integrating pricing, sourcing, product attributes, evolving partnerships between firms. It consists of three manuscripts to be submitted for journal publication. The first paper studies the coordination of pricing and sourcing in two scenarios where multiple suppliers and multiple retail channels are involved. This study investigates the cross price effects between retail channels on the overall profitability. In addition to the analytical analysis, a number of numerical experiments are conducted to investigate realistic issues decision makers may encounter. The second paper studies a supply chain in which a manufacturer sells a configurable product through a retailer. We take the configurable product as a parameterized product and examine the impact of such a feature decision on equilibrium between the manufacturer and the retailer. The analysis considers three different cost functions: (1) linear cost function, (2) quadratic cost function and (3) exponential cost function and examines how the cost functions affect the optimal solutions. The third paper presents a novel framework in which supply chain structure evolves from one stage to the next in terms of changing memberships and business partnerships between members. All of the research work so far on supply chain coordination assumes a static supply chain structure, which remains the same throughout the sequence of events. In reality, however, supply chain memberships and the partnerships between those member firms are not all established at one time and the supply chain structure is subject to evolution. Firms may join or leave a supply chain network and the partnerships between two firms may change as well. Among a large variety of possible evolving scenarios, this research focuses on a case in which a second manufacturer joins a supply chain initially established with one manufacturer and one retailer. The supply chain evolves from the stage with one partnership to the next stage with two partnerships. The two partnerships are established one after another on two competing and differentiated products. Compatibility between demand models in two stages are established. Based on the analytical non-closed form solution, a number of numerical experiments are developed to demonstrate the impact of the introduction of a competing product on the optimal solution of product one. This dissertation conducts a series of exploratory research works on supply chain coordination. It considers coordination not only between multiple players but having multiple strategies involved. It considers products specified with not only price but configurable attributes. It puts forward a novel framework, evolving supply chain, in contrast to static supply chain, the typical research subject in the literature. This dissertation provides a set of insightful results, which help better understand the underlying coordination mechanism and help make wise decisions as needed.