Supply Chain contracts

Question 1

supply chain def

Answer 1

a system of organizations, people, technology, activities, information, and ressources involved in moving a product or service from the supplier to the end customer

Question 2

supply chain contract def

Answer 2

set of rules to control the goods/cash flows in the supply chain

Question 3

different types of contract

Answer 3

• wholesale price contract: supplier charges a fixed wholesale price for every unit delivered to the retailer
  -revenue sharing contract

Question 4

supply chain’s first best profit

Answer 4

the profit under the ideal situation where the entire supply chain is owned by one party (centralized supply chain)

under the wholesale price contract, the retailer’s order quantity is always lower than the supply chain’s optimal qauntity => double marginalization

Question 5

coordinated supply chain

Answer 5

all the parties of the supply chain agreed on haaving the best profit for one another

Question 6

revenue sharing contract

Answer 6

• the supplier charges a fixed wholesale price for every unit delivered to the retailer
• each unit of sales to end consumers, the retailer pays the supplier a fixed percentage share of the retail price

Question 7

revenue sharing contract returns

Answer 7

• retailer receives: p(1-y) with y the percentage
• supplier receives: p* y

Question 8

Revenue sharing contract and First Best profit

Answer 8

The retailer’s optimal quantity is the same optimal order quantity as the first best

Question 9

revenue sharing and centralized supply chain

Answer 9

Revenue-sharing contracts allow the decentralized supply chain to achieve the same total profit as the centralized supply chain

Question 10

risk sharing contract

Answer 10

• revenue sharing contract
• returns contracts : manufacturer offers credits back to the retailer for units unsold
• rebates contract: manufacturer offers credits to retailer for units sold
• consignment contract: pay for the retailer’s shelf space