A Study On Risk-Sharing Mechanism In The Supply Chain Based On Demand Uncertainty

Focused on risk-sharing, in this thesis, what risks can be shared by supply chain members is analyzed, the reasonability of supply chain risk-sharing is demonstrated and a risk-sharing mechanism is put forward and its validity in various situations is verified.Firstly, based on a detailed description and classification of the supply chain risks, this thesis discusses the classification of the shared risks and unshared risks of the supply chain and proposes that the risks caused by the factors which are external to the enterprise but internal ones to the supply chain can be shared by the members in the supply chain. The paper also points out that the risks caused by the market uncertainty should draw more attention.Secondly, by applying the principal-agent theory, the thesis demonstrates that sharing risks among supply chain members is reasonable. Research shows that adding risk-sharing clauses to the optimal incentives contract is reasonable because risk-sharing clauses include much more relevant information. By using this relevant information, the principal can rule out the more interference of external factors, provide more information about agent's action and achieve the purpose of lowering down the risk costs and incentive costs and therefore reducing the general agent costs.Finally, options are used to manage market risks and the validity of option contract as a risk-sharing mechanism is demonstrated when the retailer is risk-neutral or he has decision-making preferences. Research shows that option contracts can not make members of the supply chain coordinate and share risks when the retailer has the extremely high risk-averse preferences. In other cases, option contract is an effective risk-sharing mechanism. Because in these cases, applying options in the management of supply chain market risks can increase the overall performance and efficiency of the supply chain, make supply chain members coordinate and share risks and thereby reach a win-win situation. The coordination among the members of the supply chain can only be achieved in the flowing three situations. The first situation is that the option price equals that in the risk-neutral situation when the retailer has waste-averse preferences. The second situation is that the option price is higher than that in the risk-neutral situation when the retailer has stockout-averse preferences. And the last one is that the option price is lower than that in the risk-neutral situation when the retailer has other decision-making preferences.