| In the first part of the dissertation, we consider the problem of coordinating supply chains with risk-averse agents. This issue has not been addressed in the extant supply chain management literature. We begin with defining a coordinating contract as one that results in a Pareto-optimal solution acceptable to each agent. Our definition generalizes the standard one in the risk-neutral case. We then develop coordinating contracts in three specific cases: (i) the supplier and the retailer each maximizes his own mean-variance trade-off, (ii) the supplier and the retailer each maximizes his own expected utility, and (iii) the supplier is risk neutral and the retailer maximizes his expected profit subject to a downside risk constraint. Moreover, in case (ii) we show that our contract yields the Nash Bargaining solution. In each case, we show how we can find the set of Pareto-optimal solutions, and then design a contract to achieve the solutions. We also exhibit a case in which we obtain Pareto-optimal sharing rules explicitly, and outline a procedure to obtain Pareto-optimal solutions.; In the second part of the dissertation, we study a supply chain consisting of a supplier and a retailer who faces a newsvendor problem. The supplier has better information on his unit production cost than the retailer does. We model this problem as a game of adverse selection. In this model the retailer offers a menu of contracts, each of which consists of two parameters: the ordering quantity and the suppliers proportion of the channel profit. The supplier, who has an alternate opportunity, either chooses one from the menu of contracts or rejects then all. We derive an optimal contract menu for the retailer under a general assumption about the supplier's reservation profit, and we find that in some cases the supply chain can be coordinated even with asymmetric information. |
