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| Coordination Contract for a Supply Chain Considering Production Leadtime and Demand Updating |
| JIAN Huiyun,WANG Guoshun |
| Central South University, Changsha, China |
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Abstract We consider the coordination of a supply chain with a long production leadtime and demand updating. The manufacturer has to make the production decision when there is limited information about the market demand due to a long leadtime and distributor is allowed to modify his initial ordering decision after observing the forecast update when sales season is coming. We focus on a contract including the wholesale price and the return price which not only extracts the maximal supplychain profit but also satisfy incentive compatibility constrain for the distributor. Contract parameters are designed by using Nash negotiation model so that the contract creates strict Pareto improvement over a simple price contract for both supply chain members.
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Received: 18 March 2011
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2012, Vol. 9 
