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Optimizing Supply Chain Collaboration Based on Negotiation and Bargain Power for Single Retailer And Single Supplier

In recent years, industries increase their flexibility, fasten their response, and enhance concurrent engineering design to react to shorter product life cycle and highly customization. To achieve these prospects, supply chain collaboration becomes a pertinent strategy for industries to strengthen their competitiveness. A well constructed collaboration between supply chain organizations will enhance trust between supply chain partners and reduce process time in complicated procedure. Moreover, a valid collaboration will consolidate the sharing of information, cost, profit, and risk within partners so that reducing inventory level and increasing on-time delivery can be achieved. However, some uncertainties within collaborative partners such as cost allocation, cost information, and methodology of decision making are difficult to be compromised and will affect the relationship between partners. Therefore, equally negotiation between collaborative partners in these uncertainties will resolve these uncertainties and have significant effect on supply chain collaboration. Hence, this research analyzes the effect of negotiation between echelons on supply chain collaboration. Mathematical models are developed to realize the significance of effect in using negotiation within collaboration. Our results shows that total cost can be reduced and customer satisfaction will be increased with the appropriate negotiation with in supply chain collaborative partners.