Supply Chain Contract Research Based On Principal-Agent Theory

Supply chain is composed of companies with independent accounting and different expectant profit. Accompanied with inefficient communication between supply chain members, different expectant profit leads low overall efficiency of supply chain. So, it becomes a important task of supply chain management to coordinate supply chain system and improve supply chain performance. Being one of the effective means to coordinate supply chain system, supply chain contract becomes one of the important issues of supply chain management research.Double-marginalization and asymmetric information are two main reasons accounting for uncoordinated supply chain system. Although plenty of results have been achieved from large number of literature at home and abroad about research on double-marginalization, focusing on allocation of decision rights, pricing, minimum purchase commitment and quantity flexibility and so on, there's less research relatively on asymmetric information, which focuses on adverse selection and moral hazard. Moral hazard attracts much attention for its universality and the research about coordination among supply chain members in this article is based on moral hazard. The existing literature shows that most research concentrates on principal-agent problem under unilateral moral hazard between single supplier and single retailer; some of the research takes double-moral hazard, multi-supplier and multi-retailer into account, but only points out the outline without specific analysis. However, in actual economic activity, companies are always being a part of a supply net and being interactional, so thinking about the case under double-moral hazard, multi-supplier and multi-retailer will be more practical. Based on this sense, we make some research in this article as follows:In the first part, we study the optimal contract under unilateral moral hazard between single supplier and single retailer. Further more, we compare the optical contracts between linear incentive mechanism and nonlinear incentive mechanism.In the second part, we study the optimal contract under double-moral hazard based on the first part. Moreover, we point out the relationship between the supplier's profit and correlative parameters and compare the expectant profit of supply chain under different case through numerical example.In the last part, we study a common agency problem through a two-supplier-one-retailer modal. The supplier's decision making arithmetic under non-cooperation was given and through numerical example we gained the optical contract. At last, we draw a conclusion that the profit of the supply chain under the case of supplier cooperation is superior to the case of suppler non-cooperation.