The cash flows in push and pull supply chains under supply disruptions

In a supply chain with a supplier and a buyer, this paper studies two typical contracts: a push contract and a pull contract. The supplier suffers from a supply disruption, and the buyer faces uncertain demand. We derive the equilibrium solutions under both contracts. We show that the order quantity and the firms' profits always increase in the supplier's reliability probability. Furthermore, we investigate how the firms' unit capital opportunity costs and the supplier's reliability probability affect the firms' preference of contracts. Finally, we identify the conditions under which the push contract is better than the pull contract for different firms.