Impact of cost sharing on quality improvement and profits under uncertain demand: The case of a textile and garment supply chain
Qigui Lang, Jianfeng Hu, Jinjin Liu
TL;DR
This paper examines how cost sharing among supply chain members affects quality and profits in a textile and garment industry under uncertain demand.
Contribution
The study introduces five game models to analyze the impact of cost sharing on quality improvement and profits in a three-layer supply chain.
Findings
Cost sharing by garment manufacturers or retailers improves quality, with the highest improvement when both share costs.
Fabric manufacturers benefit most when both garment members share costs, regardless of the sharing proportion.
Garment manufacturers or retailers gain the most profit when only the other shares costs, depending on the sharing proportion.
Abstract
The study explores the strategic pricing and quality improvement decisions under uncertain demand in a three-layer textile and garment supply chain. According to whether the fabric manufacturer (FM) invests in quality or not and whether the garment manufacturer (GM) or garment retailer (GR) is willing to share the costs or not, five game models are constructed to investigate the impact of different members’ cost sharing on the optimal decisions and profits. By conducting a theoretical and numerical analysis, we find that: (1) The GM’s or GR’s cost sharing plays a positive effect on the quality improvement, as for whose cost sharing performs better in improving the quality depending on the proportion of cost sharing, and the quality improvement is highest with both members share the costs simultaneously. (2) The FM receives the highest profit when both members share the costs…
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Taxonomy
TopicsSupply Chain and Inventory Management · Sustainable Supply Chain Management · Product Development and Customization