Performance coordination of the disrupted supply chain with transfer payment

Authors:
Jianhua Ji;Fangzheng Sheng;Desheng Dash Wu
Affiliations:
Operation and Logistics Management Center, Shanghai Jiaotong University, Room 303, North Building, Fahuazhen Road 535, Shanghai, China.;Operation and Logistics Management Center, Shanghai Jiaotong University, Room 303, North Building, Fahuazhen Road 535, Shanghai, China.;Reykjavik University, Kringlunni 1, IS-/103 Reykjavik, Iceland/ RiskLab, University of Toronto, Toronto, Ontario M5S 3G8, Canada
Venue:
International Journal of Information Technology and Management
Year:
2011

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Abstract

With the prevalence of lean production and the globalisation of the supply chain, the supply chain becomes extremely vulnerable to disruption. In this paper, we research the supply chain consisting of one supplier and n retailers and the supplier is subject to disruption. We try to coordinate the disrupted supply chain with transfer payment contract if the supplier is disrupted. To make the supplier recover from the disruption as soon as possible, the retailers afford transfer payment to the disrupted supplier. We set up the mathematic model of the disruption according to the time sequence. We establish the conditions under which the transfer payment can coordinate the disrupted supply chain. In the end, we demonstrate the usefulness of our method with a numerical example.