Consignment Contract with Competition

Consignment contracts have recently received increasing attention and have been widely employed in many industries. Under this contract, items are sold at a retailer's but the supplier retains the full ownership of the inventory until purchased by consumers; the supplier collects payment from the retailer based on actual units sold. By building a game-theoretic model, we are able to obtain insightful results from analysis of the supply chain decisions and performance under different consignment arrangements. We extend the research in consignment contracts to more realistic situations with the presence of (1) more than one retailer in the supply chain, (2) more than one supplier in the supply chain and (3) a dual channel supply chain. Incorporating these new features enables us to gain new insights and derive practical implications on the implementation of consignment contracts. In the first part of the thesis, we investigate how competition between two retailers influences the supply chain decisions and profits under different consignment arrangements with one supplier, namely a consignment price contract and a consignment contract with revenue share. In the second part of the thesis, we study how the presence of supplier competition affects the decisions and performance of a supply chain with a single retailer and two suppliers.