Study On Buy-back Contract In Supply Chain Management For Perishable Goods

With the development of economic globalization, Supply chain management has become an important management model for modern enterprises. Moreover, as a part of supply chain management, contract management has got much attention. By adopting theories and methods of contract theory and newsvendor model in Operations Research, this paper studies how to adopt buy-back contract to design reasonable terms of supply contracts in order to coordinate the relationship between supplier and retailers and to realize the"Win-Win''condition, even to achieve supply chain coordination in a two-echelon supply chain for perishable goods with one supplier and one retailer.Firstly, the paper describes systematically supply chain contracts and summarizes explicitly the current theoretical research on buy-back contract. Specifically, it makes analysis on supply chain coordination with contracts under asymmetric demand, price-demand relationship and information updating.Secondly, based on hypothesis of classical newsvendor model, by including such factors as price-demand dependent, residual and stock-out loss, the paper builds up the single-product supply chain consisting of one supplier and one retailer. It points out the difference between the traditional model and improved model and some problems during the execution of the Buy-back contract. It further makes suggestions for improvement.Further, the paper discusses the supply chain coordination with buy-back contracts under price-demand relationship and demand information updating. Assuming that demand information is updating, the paper builds up the bi-directional return contract, so the manufacturer and retailer share risk together through the buy-back price and the risk sharing parameter. We get the approach to solve the optimal ordering quality and the optimal price to achieve the supply chain coordination.