Analysis on supply chain coordination and profit allocation based on buyback contract

Abstract

Supply chain coordination should consist of two aspects of coordination: behavior coordination and interest coordination. Firstly, the supply chain behavior coordination problem is analyzed based on the buyback contract. Then, three methods about the supply chain's profit allocation when the supply chain is coordinated are discussed. The three methods are: 1 the supplier's optimization model considering the retailer's participation constraint; 2 Nash bargaining method; 3 the method in which the contract parameters are confirmed based on the balance between revenue and risk. Finally, a numerical example is given to illustrate the usage of the three methods, and the comparative analyzes of the three method's results are analyzed. It can be seen from the example that there exists big difference among the results of the supply chain profit allocation due to the different methods.