Coordination of a dual-channel supply chain after demand or production cost disruptions

Coordinating a dual channel supply chain could not only achieve the integrated profit of the supply chain but also alleviate the channel conflict. Although a lot of researches addressed this area, there is scant literature to discuss the coordination issue in the situations of disruption. To fill this void, we utilize a contract with a wholesale price, a direct channel's price and a lump sum fee to coordinate a dual channel supply chain under the case of demand disruption or production cost disruption. We derive the optimal contract of each case and find that the manufacturer can achieve the coordination of the disrupted supply chain by means of adjusting the parameters of the coordination contract of normal environment. Moreover, after disruption, there exists a contract-adjusting benefit zone, in which both the manufacturer and the retailer can benefit from the adjustment of coordination contract when demand increases or production cost decreases. We also investigate the production and distribution strategies of the coordinated dual-channel supply chain after disruptions. The analysis suggests that the adjustment of the total production and the sales of each channel depend heavily on the level of disruptions and the degree of consumers' loyalty to both channels.