Journal
EUROPEAN JOURNAL OF OPERATIONAL RESEARCH
Volume 207, Issue 3, Pages 1321-1326Publisher
ELSEVIER SCIENCE BV
DOI: 10.1016/j.ejor.2010.07.017
Keywords
Supply chain management; Fairness; Channel coordination; Stackelberg game; Wholesale price contract
Funding
- Hong Kong RGC [410906]
- NSFC [70901029]
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The supply chain literature analyzing supplier-retailer contracts and channel coordination has typically focused on profit or revenue maximization as the members' sole objective. In such settings, it is well known that a simple wholesale price contract is not effective in coordinating the channel due to double marginalization. Recently, Cui et al. [Cui, T.H., Raju, J.S., Zhang, Z.J., 2007. Fairness and channel coordination. Management Science 53 (8) 1303-1314] introduced the members' fairness concerns into channel coordination. Assuming a linear demand function, the authors show that a coordinating wholesale price contract can be designed when only the retailer or both parties are concerned about fairness. In this paper, we extend the authors' results to other nonlinear demand functions that are commonly used in the literature. Our analysis reveals that, compared to the linear demand, the exponential demand function requires less stringent conditions to achieve coordination when only the retailer is fairness-concerned. (C) 2010 Elsevier B.V. All rights reserved.
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