Supply Chain Coordination Research With Asymmetric Demand Information And Risk-aversion Participants Based On Option Contract

Supply chain management thought has been developed rapidly since the inception of the nineties of last century. The global or systematic point of view is required in supply chain management to plan the all aspects involved for the supply chain from end customers to the original suppliers, in which logistics, information flow and capital flow among the participating organizations and departments will be effectively planned, organized, coordinated and controlled to make supply chain as a first-best whole. The target of supply chain management is making the traditional starting from the independent operation of their own interests as a pattern using scientific management to achieve the overall collaborative operation and thereby the overall efficiency and the competitiveness of enterprises are improved. However, supply chain management practice has been confront with many challenges, such as how to enable the supply chain of enterprises belonging to different economic entities to establish a mutual sense of cooperation in order to have symmetric information, how to coordination the supply chain with different risk-aversion participants and so on, eventually the aim is to develop their own operational decisions with the interests of the whole supply chain. Therefore, supply chain coordination research is endowed with theoretical significance in the case of information asymmetry and risk-aversion, and what is more, this is also consistent with the actual situation, the research in this field is meaningful in practice.In this paper, based on the literature review, we study mainly supply chain coordination problem through the option contract model in the context of demand information asymmetry and risk-aversion participants in supply chain: (1) This part deals with the coordination of supply chain consisting of one supplier and one retailer under asymmetric demand information. the option contract is designed from the perspective of the supplier signal selection using game principles by using of incentive compatibility and participation constraints in principal-agent theory, which enables the retailer make the actual action consistenting with the true information. In accordance with this principle, the coordination model with the special discrete demand state distribution and option contract is established, and the model is further extended to the general continuous demand state distribution. Therefore the information sharing mechanism and the optimum solutions under two models are obtained. The results show that option contract can coordinate the supply chain under two kinds of demand state distributions and eliminate the influence of information asymmetry; (2) Next, supply chain coordination problem with different risk-aversion participants based on option contracts is studied, and each participant's risk-aversion is characterized by CVaR method. The CVaR models are established in supply chain consisting of a risk-aversion supplier and a risk-aversion retailer with stochastic market demand, some conditions should be met to coordinate supply chain. Finally, an example analysis reveals what effects that risk aversion degree of the supplier and retailer imposed on option exercise price, the retailer optimal order quantity, the CVaR values and expected profit of supply chain and its membership, and the significance of option contract is discussed in comparative static analysis process and some important messages are drawn.