Based On Supply Chain Risk Aversion Sales Rebate And Penalty Coordinated Research Contract

Supply chain coordination is a hot topic in the research of supply chain management. And settting appropriate contracts among agents to ensure the coordination between the seller and the buyer has become an important branch of supply chain coordination. However, the traditional supply chain coordination research is based on the assumption of risk neutrality, without taking the decision maker’s risk preference into account. In recent years, extensive experimental and empirical evidences show that decision makers may have risk preference, and the issue of supply chain coordination based on the assumption of risk preference is getting more and more attention from both researchers and practitioners.In the context of price-dependent or sales effort-dependent demands, the existent researches have shown that a single contract, such as the buyback contract, sales rebate and penalty contract, quantity discount contract etc, can’t achieve supply chain coordination, whereas joint contracts, could coordinate the supply chain. However, one of the common assumptions in these studies is risk neutrality. Under the assumption of risk preferences exihited by decision makers, it is unknown whether the results derived from these studies are still applicable.In light of this, this article models a two-stage supply chain by considering decision makers’risk aversions. The supply chain is consisted of a single supplier and a single retailer. The problem of supply chain coordination via setting appropriate contracts between agents is investigated. Specifically, this article has analyzed the following three issues:(1) Supply chain coordination based on risk aversion and stochastic demand under a sales rebate and penalty contract. Both the supplier and the retailer are assumed to be risk averse. With a random and uncertain demand, the necessary and sufficient conditions for the sales rebate and penalty contract to achieve channel coordination are identified. Moreover, the conditions satisfied by the contract parameters when the supply chain is coordinated are explored. The results show that:there exist multiple sales rebate and penalty contracts that can coordinate the supply chain. And the effectiveness of the contract depends on the difference in the degrees of risk aversions between the supply chain (supplier) and the retailer. Specifically, if the degrees are too far away, then channel coordination can’t be achieved via setting a sales rebate and penalty contract.(2) Supply chain coordination with risk-averse retailer and sales-effort dependent demand under a sales rebate and penalty contract. In the supply chain, the retailer is assumed to be risk-averse, and the market demand is sensitive to sales effort. Under both the multiplicative and additive demand models, the necessary conditions for the sales rebate and penalty contract to achieve channel coordination are determined. The results manifest that:in the context of a risk-averse retailer and sale effort-dependent demand, a single sales rebate and penalty can still coordinate the supply chain. Furthermore, under both the multiplicative and additive demand models, the contitions of the optimal contract parameters to satisfy are consistent.(3) Supply chain coordination with risk-averse retailer and double factors dependent demand. Similarly, in this supply chain, the supplier is assumed to be risk-neutral while the retailer risk averse. Besides, the demand is sensitive to both the price and sales effort. The issue of supply chain coordination is studied. The research results reveal that:in the context of a risk-averse retailer and the demand depending on both price and the sales effort, a single sales effort and penalty contract can’t coordinate the supply chain any more. A simplier two-part tariff contract and a joint contract are employed to achieve channel coordination. The results imply that only a two-part tariff contract can achieve supply chain coordination. Moreover, when the channel achieves coordination, in two-part tariff contract, the optimal wholesale price is equal to the supplier’s production cost, and the value of the fixed transfer payment reflects the degree of the retailers’risk aversion.