Abstract
This paper presents the effective contract to encourage the coordination of the retailer and the manufacturer in the supply chain to meet the random demand of a fashion product with the demand forecast updating. Because an order is decided before the sales begin by an initial demand forecast, the retailer is also encouraged to adjust order quantity according to the updated demand forecast. If the retailer decreases the order quantity, the retailer will share the manufacturer's loss for overstocking in a certain proportion at the same time. The reasonable wholesale and return prices are put forward to coordinate with the retailer on the order decision. Not only can we encourage the retailer and the manufacturer to coordinate in the best interest of the channel, but also do it independent of the demand distribution. The profit allocation follows the market rule of the higher risk, the more profit.
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