Study on Stackelberg game of supply chain coordination with uncertain delivery

TLDR: A kind of Stackelberg game of supply chain, where the leader is producer and the follower is supplier is discussed, and the solution is deduced and shows that Stackellberg game is effective and practical.

Abstract: Coordinating producer and supplier is one of main issues of supply chain with uncertain delivery. Considering interaction between the members in supply chain, there is a Stackelberg game in supply chain. The nature of the Stackelberg game is discussed in this paper. The solution of the game is deduced. As the leader, the producer in supply chain initializes the optimal order quantity and penalty cost policy for minimizing his cost, while as the follower, the supplier responds with the optimal extra capacity policy for maximizing his profit. Appling genetic algorithm, a simulation about tail rolled steel products is done based on Shanghai BaoSteel industry trade co.. The solution is adopted for implementing JIT in the supply system of Shanghai BaoSteel industry trade co.. The simulation solution shows that Stackelberg game is effective and practical.