Channel coordination under fairness concerns and nonlinear demand

Ozgun Caliskan-Demirag, Youhua Chen, Jianbin Li

Research output: Contribution to journalArticle

114 Scopus citations

Abstract

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.

Original languageEnglish (US)
Pages (from-to)1321-1326
Number of pages6
JournalEuropean Journal of Operational Research
Volume207
Issue number3
DOIs
StatePublished - Dec 16 2010

    Fingerprint

All Science Journal Classification (ASJC) codes

  • Computer Science(all)
  • Modeling and Simulation
  • Management Science and Operations Research
  • Information Systems and Management

Cite this