The Value Of Buyback Contracat Under Yield Uncertainty

With the fierce competition in the market and personalized demand,making the product update faster and the product life generally shortened.Especially for perishable goods,they will depreciate or even lose value in a relatively short period of time.As a result,the return of unsold products has become an increasingly common phenomenon.Buyback contract is a contract mechanism which is widely used in the product return.In short,for unsold products,the upstream manufacturer repurchase the unsold products of downstream retailer at buyback price which is less than or equal to the wholesale price,thereby reducing the double marginal effect due to the independence decision-making of supply chain members.Studies have shown that,buyback contract can effectively improve the profits of supply chain members under uncertain demand.However,there is little paper research on buyback contract under random yield.Therefore,this paper study the following two aspects of the value of buyback contract under random yield:(1)Under the environment of competition and yield uncertainty,the profit models of the buyback contract and the wholesale price cdntract are developed respectively,and the value of buyback contract is analyzed.Consider a secondary supply chain consisting of one manufacturer and two competing retailers,in which the yield of manufacturer is random and retailers face market competition.The pricing ordering and sales decisions of wholesale price contract and buyback contract are studied respectively by using optimization theory,Stackelberg Game method and Nash Equilibrium theory.Study the impact of random yield on the profit and decisions of manufacturer and retailers.The study shows that buyback contract can effectively improve the profits of the supply chain members within the lower yield uncertainty;the value of buyback contract is same for both manufacturer and retailers in terms of profits,that is,when the production uncertainty is lower,buyback contract increases the profits of the manufacturer and retailers at the same time.(2)This part studies the value of buyback contract and payback contract under demand uncertainty and random yield.Consider one manufacturer and one retailer,the manufacturer's production is uncertain,and the retailer faces demand uncertainty.We use Stackelberg Game method and optimization theory to carry on pricing,production,ordering and sale decisions.Study shows that in most cases the manufacturer tends to use buyback contract in the case of smaller profit margin;but for the retailer,buyback contract is more favorable in most cases.