Buyback Contract under Fairness Preference Coordinating Dual-channel Supply Chain

Abstract

This paper develops a coordinating model of dual-channel supply chain made up of one supplier and one retailer, who is endowed with fairness preference and faces a stochastic demand influenced by his sales effort. By introducing the fairness preference into the buyback contract, the compacts of fairness preference on the coordination of dual-channel supply chain are probed carefully. It is proved that whether the retailer concerns fairness or not, the dual-channel supply chain can always achieve coordination as long as the contract parameters are given proper values respectively. Furthermore, the numerical analysis shows the influence of retailer effort on the order strategy of channel members, and the influence of fairness preference on the utility of retailer and the whole supply chain and the profit of the supplier, which can be referred for the decision-making of each channel member.