Application of super-modular game model on quality and safety management of supply chain based on process control

Application of super-modular game model on quality and safety management of supply chain based on process control

Du Zhao*

School of Economics and Business Administration Chongqing University, Chongqing 400044, China

Corresponding Author Email: 
zhaodu@cqu.edu.cn
Page: 
569-580
|
DOI: 
https://doi.org/10.3166/JESA.50.569-580
| |
Published: 
31 December 2017
| Citation

OPEN ACCESS

Abstract: 

None of the existing modelling methods on product quality and safety management takes account of process control. To make up for this gap, this paper investigates the coordination contract and optimal decisions of supplier and manufacturer. Specifically, a supply chain of one supplier and one manufacturer was created, with the supplier producing the key components of the final products and deciding product quality and safety. On this basis, a model of quality and safety management was constructed based on the theory of static game and the super-modular game, the model of quality management is construct. Then, the supplier’s and retailer’s decisions were analyzed separately under global decision model and local decision model. The research results show that measures like technology innovation, knowledge sharing and well-established legal system promote the stability and development of the supply chain; the linear-cost sharing contract designed by local decision model can only achieve suboptimal equilibrium, which contains at least one pure strategy Nash equilibrium, rather than obtain the global optimal solution; the proposed contract can enhance the product quality and reduce the quality cost of both parties, if there are multiple equilibria. The main contributions of this paper are as follows: proving the existence of pure strategy Nash equilibrium when the supplier and manufacturer are in a quality management game; determining the conditions for reaching Pareto optimality under multiple equilibria; setting up the quality management decision model, in which the supplier learns about quality improvement using manufacturer investment, considering the limited ability of the supplier to improve product quality; constructing the game model of quality management by intervening in the production process. The research findings provide useful reference for the quality and safety management of supply chain.

Keywords: 

super-modular game, process control, product quality safety problems, supply chain management

1. Introduction
2. Problem description and model assumptions
3. Model analysis
4. Conclusions
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