Proceedings of the 7th International Conference on Applied Research in Business, Management and Economics
Year: 2024
DOI:
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Optimal Buy-Back Price for Supply Chain Coordination
Tamás Faludi
ABSTRACT:
Supply chain coordination is a very popular topic in the 21st century. Supply chains involve a large number of members, and in order to work together effectively, it is necessary to coordinate the value creation processes of these members in some way to ensure that the ‘customer is king’ principle is upheld and a high level of customer satisfaction is guaranteed. Because of the large number of members, chains are now considered as networks in the literature. Many opportunities are available to achieve the right level of coordination between members. One possible coordination tool is the contracts. This paper is focused on the chance of coordination improvement with the help of one interesting contract, which is the buy-back contract. This type of contract has a very sensitive point: the buy-back price. If this value is too low or too high, it results in negative influences on one or both parties. That is the reason why it is very important to determine an optimal buy-back price. The paper includes a model, which can help to understand the influencing factors of buy-back price, and with the help of this, an analytical model can be presented for the calculation of the optimal buy-back price.
keywords: Supply Chain Management, Supply Chain Coordination, Contracts, Buy-Back Price