Supply Chain Contract Preferences Under Two Uncertain Selling Seasons Considering Intertemporal Inventory Capability

Abstract

We propose an intertemporal inventory decision model under demand uncertainty and retail competition. Facing the fact that different firms may have different intertemporal inventory capabilities, the paper introduces two retailers and assumes only one retailer has the ability to carry intertemporal inventories. Two different contracts, i.e., the dynamic wholesale-price contract and the commitment wholesale-price contract are proposed. The optimal decisions are derived under each contract, and all members’ preferences regarding the two contracts are investigated. The results show that there exist some situations in which the supply chain members prefer the same contract, and they can reach an agreement on the contract selection. We also find that the intertemporal inventory discriminately affects the supply chain members’ expected profits under two different contracts. The retailer’s intertemporal inventory capability may be beneficial for all members under the dynamic wholesale-price contract, but it always damages the supplier’s expected profit under the commitment wholesale-price contract.

Keywords

• Intertemporal inventory
• retail competition
• dynamic contract
• commitment contract