A thesis submitted in partial fulfillment of the requirements for the degree of Master of Engineering in Industrial and Manufacturing Engineering

Thesis (M.Eng.) -- Asian Institute of Technology, 2018

In this research, we study coordination mechanism by using supply contract between one retailer and two suppliers. The profit functions of each member are developed under the presence of supply disruption. Specifically, concept of backup supplier is introduced to deal with the supply chain disruption in order to maximize the supply chain profit by using option contract. After developing the mathematical models, effect of the input parameters to the decision variables analyzed using MATLAB program. Furthermore, sensitivity analysis and coordination efficiency are conducted to examine the behavior of the profit functions and the effectiveness of the coordination of the supply chain.