The coordination mechanisms of emergency inventory model under supply disruptions

This paper develops a cooperative emergency inventory model to deal with supply disruptions. To achieve a cooperative state between the two sides in supply chain, the game theory is used and three coordination mechanisms are proposed. With the emergency inventory method which has been established, many tests of numerical experiments are made. The aim is to find the optimal mechanism so that the conditions of three mechanisms need to meet are analyzed. Results show that the total profits of the whole supply chain are unchanged in return mechanism. In cost-sharing mechanism, the manufacturer’s profits are smaller than the profits before coordination, and the supplier’s profits are greater than the former, but total profits of the whole supply chain become larger. The proposed model with the introduction of a second manufacturer mechanism performs best, which can make up the expenses by using the new joined manufacturers. It also can help the manufacturers respond to the supply disruptions effectively and that will not harm the profits of both sides.