Buyback Contract Coordinating Supply Chain Incorporated Risk Aversion

Guangxing Guangxing,Yanhong Qin,Qing Wu,Xin Deng

doi:10.19026/rjaset.5.4932

Abstract

This research studies the buyback contract of a supply chain system composed of a risk-neutral supplier and a risk-averse retailer. The buyback contract is divided into two cases, the credit for all unsold goods and the credit for a partial return of goods, which are theoretically analyzed and simulated numerically respectively. The results show that when the retailer is risk averse, the supply chain system is able to achieve coordination. The buyback price is an increasing function of and the buyback ratio is also an increasing function of, while the wholesale price is a decreasing function of the risk aversion.

Highlights

Theoretical analysis has drawn the conclusion that contracts such as the buyback contract, the revenuesharing contract and the quantity-flexibility contract can coordinate supply chain and optimize the profit of the whole supply chain and those of each chain member (Cachon, 2003)
This research studies the buyback contract of a supply chain system composed of a risk-neutral supplier and a risk-averse retailer
The buyback contract was divided into two cases, the credit for all unsold goods and the credit for a partial return of goods, which are theoretically analyzed and simulated numerically respectively

Summary

Introduction

Theoretical analysis has drawn the conclusion that contracts such as the buyback contract, the revenuesharing contract and the quantity-flexibility contract can coordinate supply chain and optimize the profit of the whole supply chain and those of each chain member (Cachon, 2003). This study studies the buyback contract for the supply chain with a risk-neutral supplier and a riskaverse retailer. This study will design full and partial buyback contract to coordinate the supply chain system composed of a risk-neutral supplier and a risk-averse retailer, respectively.

Results

Conclusion