Coordination of the supply chain of seasonal products

Because of the demand uncertainty of seasonal products, the retailer prefers to place an order as late as possible, so that he can have enough time to collect more information, which is helpful to reduce demand forecast error. On the other hand, the manufacturer has limited production capacity in general cases. The late ordering would result in insufficient production times, thus increasing the production cost. Such a conflict exists universally in a supply chain, especially in the seasonal products' supply chain. As a result, coordination between the retailer and the manufacturer becomes very important. In this paper, based on the traditional operating system, an improved operating system is introduced whose impact to both bodies of a supply chain is examined under the condition of information symmetry. The result shows that the manufacturer may not be better off or well off, although the retailer's performance is improved. Then, some profit compensation plans are designed so as to make the operating system Pareto improve.