Study on the decision-making and coordination of an e-commerce supply chain with manufacturer fairness concerns

Abstract

The decision-making and coordination of an e-commerce supply chain (ECSC) with manufacturer fairness concerns by incorporating the e-commerce platform into the decision-making process is studied in this paper. An ECSC composed of a single manufacturer and a single e-commerce platform is developed, and the optimal decisions for three scenarios are investigated, namely, a decentralised decision-making model without consideration of fairness concerns, a decentralised decision-making model considering manufacturer fairness concerns, and a centralised decision-making model. Then, a comparative analysis of the optimal decisions of the different models is conducted. On this basis, a coordination mechanism for the decentralised decision-making models is further proposed, and finally, a numerical analysis is employed to verify the conclusions. The research shows that the e-commerce platform, although it is the dominant party, obtains less profit than the manufacturer due to the unique operation characteristics of the ECSC. The sales price, service level, and profit of the ECSC are maximised in the centralised decision-making model, and they are not affected by the commission rate. The sales price, service level and profit of the decentralised decision-making model that considers manufacturer fairness concerns are inferior to those for the model that considers fairness concerns, indicating that manufacturer fairness concerns reduce system efficiency. In addition, a ‘cost sharing joint commission’ contract can be used to coordinate an ECSC.