Coordination in project supply chain based on uncertainty theory

Abstract

In this paper, we investigate channel coordination of project supply chain based on uncertainty theory. The project is conducted by one manufacturer, whose materials are provided by different suppliers. To complete the project before its deadline, the manufacturer needs to consider two elements – the on-site task duration and the material delivery lead time. Due to the lack of historical data, these two elements are assumed as uncertain variables. Through modeling and analyzing, the time-based contract is proved to achieve channel coordination if the manufacturer can decide the following two terms: the targeted material delivery date, and the fraction and the timing of the delayed payment. The manufacturer and his suppliers can have a win-win outcome by contract design. The impacts of variables’ uncertainty degrees are discussed as well. Generally speaking, uncertainty degrees’ increases bring more risks to the project’s completion. However, it is proved that the manufacturer can still keep his profit by changing the bonus and penalty even if the on-site duration and material delivery lead time’s uncertainty degrees increase.