Supply chain network equilibrium with revenue sharing contract under demand disruptions

Contract is a common and effective mechanism for supply chain coordination, which has been studied extensively in recent years. For a supply chain network model, contracts can be used to coordinate it because it is too ideal to obtain the network equilibrium state in practical market competition. In order to achieve equilibrium, we introduce revenue sharing contract into a supply chain network equilibrium model with random demand in this paper. Then, we investigate the influence on this network equilibrium state from demand disruptions caused by unexpected emergencies. When demand disruptions happen, the supply chain network equilibrium state will be broken and change to a new one, so the decision makers need to adjust the contract parameters to achieve the new coordinated state through bargaining. Finally, a numerical example with a sudden demand increase as a result of emergent event is provided for illustrative purposes. © 2011 Institute of Automation, Chinese Academy of Sciences and Springer-Verlag Berlin Heidelberg.