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Articles

Supply Chain Coordination Mechanism on Capacity Based on Commitment Contract under C2B Mode

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  • School of Business Administration, Zhejiang Gongshang University, Hangzhou 310018, China

Received date: 2016-06-30

  Revised date: 2017-01-20

  Online published: 2017-06-29

Abstract

C2B is a new e-business model, which is initiated by the customer and the enterprises respond quickly. Alibaba, Kadang and other well-known enterprises are actively promoting this model. C2B model can better meet the individual needs of customers, and minimize inventory, but put forward higher requirements for supply chain management. In the C2B model, the uncertainty of market demand and the long lead time make the demand forecast very difficult, it is easy to appear the situation of insufficient capacity or surplus, and because of the uncertainty of consumer's individual demand, it is difficult for a C2B enterprise to draw up a formal contract based on precise order quantity with the supplier, but the commitment contract provides an effective way to solve the problem. In this paper, a single-cycle two-echelon supply chain model consisting of a supplier and a C2B enterprise is considered. This study focuses on the application of the commitment contract to the supplier's capacity decision and coordination function of a decision-making which effected by the supplier's customization efforts. The decision-making sequence of the supply chain members is as follows: First, the C2B enterprise obtains demand forecast based on their understanding of the consumer market, and commitment to buy a certain amount of products, in order to share the supplier's capacity investment risk, demand forecast and commitment quantity are exogenous variables. Then, the C2B enterprise make decision on the degree of customization effort. Next, supplier determines the product capacity according to C2B enterprise's decision. After the demand realizes, the C2B enterprise issues the final order quantity to the supplier according to the actual received customer order. If the supplier can't meet the C2B enterprise's orders, unit penalty cost showd be paid. Finally, C2B enterprise delivers products to customers after completing customization processing .The game equilibrium of supply chain members in three situations is analyzed: centralized decision, decentralized decision, and contractual commitment. It also examines the effect of the important parameters such as the demand forecast for customized products and the proportion of committed orders to supplier and total profit. The result shows that the commitment contract has a good coordination effect on supply chain capacity decision in the contractual commitment situation, but the C2B enterprise needs reasonably set the parameters of the commitment contract to better play its positive role. The innovation of this paper lies in two aspeds as follows: Firstly, the coordination model of supply chain based on customer's individual demand was constructed, and the impact of demand forecasting, commitment and other factors on supplier capacity decision-making is investigated, which provides a theoretical basis for optimizing production capacity decision-making; Secondly, it expands the commitment contract to the design of supply chain coordination mechanism under C2B mode, and considers its impact on the customization efforts of supply chain members, which enriches the research content of commitment contract.

Cite this article

XIAO Di, HOU Shu-qin . Supply Chain Coordination Mechanism on Capacity Based on Commitment Contract under C2B Mode[J]. Chinese Journal of Management Science, 2017 , 25(4) : 86 -94 . DOI: 10.16381/j.cnki.issn1003-207x.2017.04.011

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