Impact of Supplier's R&D Investment on Supply Chain Operations under Stochastic Isoelastic Demand and Consignment Contract

DOI

10.2991/saeme-17.2017.3How to use a DOI?

Keywords

decentralized supply chain; R&D investment; cost reduction; isoelastic stochastic demand, consignment contract.

Abstract

In a decentralized supply chain with an upstream supplier and a downstream platform, the supplier sells a product to a stochastic isoelastic demand market through a platform. The supplier considers to make R&D investment to reduce its production cost, and hence the supply chain becomes more cost efficient. We first characterize the equilibrium pricing and production decisions for the two chain members, under any given R&D investment strategy. We then analyze the impact of the supplier's R&D investment on equilibrium decisions and corresponding profits of the two chain members. We find that the supplier's R&D investment can lead to a lower retail price and a higher production quantity, and always benefit the platform's profit.

Copyright

© 2017, the Authors. Published by Atlantis Press.

Open Access

This is an open access article distributed under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/).

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TY  - CONF
AU  - Hengyun Zhang
AU  - Ruoyu Lu
PY  - 2017/07
DA  - 2017/07
TI  - Impact of Supplier's R&D Investment on Supply Chain Operations under Stochastic Isoelastic Demand and Consignment Contract
BT  - Proceedings of the 2017 International Conference on Sports, Arts, Education and Management Engineering (SAEME 2017)
PB  - Atlantis Press
SP  - 12
EP  - 17
SN  - 2352-5398
UR  - https://doi.org/10.2991/saeme-17.2017.3
DO  - 10.2991/saeme-17.2017.3
ID  - Zhang2017/07
ER  -