Supply chain coordination under cost disruption and advertising synergy

To maximize the profits in centralized supply chain and decentralized supply chain, when the market demand was influenced by both market retail price and advertising synergy effect simultaneously, supply chain system coordination models were constructed under production cost distruption and under no production cost distruption respectively. Optimal decision method was used to deduce and analyze optimal retail price, optimal advertisement cost, and optimal market demand quantity before and when cost disruption occurred. The profit sharing mechanism consisting of optimal wholesale pricing policy was designed to coordinate the channels. Theoretical analyses and research results showed that the values of optimal retail price and optimal market demand quantity remained unchanged within robust scope of cost distruption and fluctuated outside robust scope of cost disruption, while the value of optimal wholesale price was proportional to the extent of cost disruption positively. Numerical simulation examples and figures illustrated the nonlinear relationship between cost disruption and optimal decision variables.