Supply Chain Retailer Wholesale Price Contract Pricing

With the gradual formation of buyer market, the retailer’s scale was expanding and the concentration degree of the retail market was improving. These trends intensified the ability of retailer to control supply chain and grasp market demand information, which also improved the importance of retailer in the supply chain. The above changes promoted the transfer of supply chain’s dominant right, manufacturer-driven supply chain mode has been gradually replaced by retailer-pull supply chain mode. It has become an important operation mode that the retailer obtained the pricing power of wholesale price by controlling the marketing channel. However nobody has researched the corresponding contract coordination issue since wholesale price pricing power being transferred.This study has researched the problem of supply chain coordination when retailer has the wholesale price pricing power, and takes both the retailer’s sales efforts and the risk attitude into consideration. We used game analysis method, mathematical model analysis method, numerical analysis method and optimization etc to solve this problem.Firstly, we considered the supply chain which consists of one risk neutral manufacturer and one risk neutral retailer when market demand is depend on retailer’s sale efforts. We found that the gain sharing contract couldn’t coordinate this supply chain. So we improved the general gain sharing contract, and designed a new contract named as gain and cost sharing contract. Through these analyses, we found that the gain and cost sharing contract can coordinate the supply chain.Secondly, we considered the supply chain which consists of one loss aversion manufacturer and one risk neutral retailer when market demand is depend on retailer’s sale efforts. We found that the gain and cost sharing contract can coordinate this supply chain, and the optimal wholesale price and the manufacturer’s expected utility were increasing with the increase of manufacturer’s loss aversion degree, while the optimal sale efforts, the optimal shipments and the retailer’s expected utility were decreasing with the increase of manufacturer’s loss aversion degree.Thirdly, we considered the supply chain which consists of one loss aversion manufacturer and one loss aversion retailer and market demand is depend on retailer’s sale efforts. We found that the coordinating role of the gain and cost sharing contract had relationship with the relative size of the loss aversion coefficient of the whole supply chain and the loss aversion coefficient of manufacturer and retailer, found that when the loss aversion coefficient of the whole supply chain was higher than the loss aversion coefficient of manufacturer and retailer, the gain and cost sharing contract can coordinate the supply chain completely. We also found that the impact of retailer’s loss aversion level on the supply chain was more significant than manufacturer’s loss aversion level.