Supply Chain Coordination Study Based on Retailers' Inventory Transshipment via eMarketplace

Transshipment of goods, that is the practice of transferring goods from a location with excess stock to satisfy the demand of a location with insufficient stock. In resent years, an increasing number of manufacturers have started to pursue a strategy that promotes inventory sharing among the dealers in their distribution network. In this paper, using stochastic demand models, we study a Stackelberg game between a manufacturer and his identical retailers, when transshipment among the retailers via eMarketplace launched by the manufacturer with the price endogenously determined to clear the secondary market. In such a game, the retailers decide the ordering quantities to maximize themselves profits, and the manufacturer who proposes the revenue sharing contract as a Stackelberg leader to maximize the supply chain's profit. We demonstrate that the Pareto efficiency can be attained in the supply chain by employing a revenue sharing contract, and whole profits of the supply chain can be allocated arbitrarily among them according to their reserved profits. Finally, the results of this paper are verified by numerical example.