Robust supply chain coordination modeling: A revenue management perspective

The revenue management concept and techniques are applied to model the coordination of supply chainelements. the fundamental premise of this approach is synchronization of a group of business entities consistingof a manufacturer and multiple suppliers to achieve an optimal supply chain capacity plans. the output ofthe supply chain can be various products and thus it is measured in terms of capacity. in our paper, the demandis stochastic. as a result, the chain faces uncertainty when it comes to determine the volume of contractbetween manufacturer and suppliers. the model developed in this paper provides the basis for long-term contractsbetween manufacturer and its supply network for coordinated and non-coordinated supply relationship.it also provides decision rules to increase flexibility in responding to consumer demand shifts without costoverlays in resource utilization, while increasing the overall capacity utilization and market share. the collaborationframework versus independency of supply chain members is introduced to investigate the rules forcompetition through optimal demand management and capacity allocation. an important result is that themodels are robust, as they are independent of demand distribution function. we also study the effect of a supplierwho supplies two competitive chains on capacity and price basis. our analysis of supply-chain showsthat at the presence of uncertainty of demand collaborative chains are more robust to capacity reservation plancomparing to independent identities as far as capacity is concerned. the robustness of a supply network tosupport the chain leader (manufacturer) is also measured and the trade off for sustainable network is proposed.