Quantity flexibility contracts with unreliable supply

Abstract

We consider the problem of supply chain coordination when the supplier is unreliable. By unreliable, we mean the supplier that with some probability delivers an amount strictly less than the amount desired. We formulate the decision models under the quantity flexibility contract model with unreliable supply. The analysis results show that the quantity flexibility contracts with unreliable supply can make the supply chain coordinated under certain conditions. Finally, the conclusions get further proved through numerical analysis.