Supply Chain Coordination under Inventory Inaccuracy with RFID Technology

In this paper we consider a two-echelon supply chain under price-dependent demand market and we use RFID to eliminate the effect of inventory inaccuracy. Models are built to evaluate the economic viability and coordination conditions. We analyze two scenarios in which the supply chain is defined, the integrated one and the decentralized one, respectively. For the integrated, we compare the different supply chain revenue with and without RFID technology and then determine the optimal inventory decisions. For the decentralized, we mainly focus on the coordination mechanism by revenue sharing contract under Stackelberg game. By seeking appropriate contract parameters, the supply chain can finally be coordinated while all partners are better off. Furthermore, numerical examples are given to verify our proposition.