Contracts design for a supply chain with logistics joint outsourcing under VMCI mode

This paper studies a contracts design problem for a produce-transport-sales supply chain consisting of a supplier, a TPL service provider and a retailer under VMCI mode. It means the supplier manages the retailer’s inventory and the retailer transfers payments to the supplier based on the amount of products actually sold. Considering the situation that the supplier and the retailer jointly outsource the logistics service to TPL and bear the logistics service fee together, we build a sequential non-cooperative game model in which the supplier is the leader, the TPL and the retailer are the followers. It is proved that the equilibrium solutions of consignment quality, logistics service price and sales effort are exist and unique. The results show: The equilibrium sales effort under decentralized mode is lower than that under centralized mode; the equilibrium consignment factor and quality under decentralized mode are smaller than the corresponding results under centralized mode when the system’s profit margin is higher than the supplier’s profit margin. Then, a sales effort cost sharing contract is introduced between the retailer and TPL and the parameter conditions of system realization of Pareto improvement and maximum expected revenue are given. A sales revenue sharing contract and a sales subsidy contract with antiequivalent relation are further constructed between them by considering the size of consignment factor under VMCI is not clear. Then, the conditions for perfect coordination and Pareto improvement of the system are given. Finally, the above conclusions are verified through a calculation example. Besides, the sensitivity analysis of logistics cost allocation coefficient and transfer payment price is made, and the feasibility of the system to achieve Pareto improvement on the basis of perfect coordination is confirmed. © 2020, Editorial Board of Journal of Systems Engineering Society of China. All right reserved.