Contract analysis: A performance measures and profit evaluation within two-echelon supply chains
Computers and Industrial Engineering
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In the context of a two-echelon supply chain with one manufacturer and one risk-averse retailer, the optimal order quantity of the retailer and revenue-sharing contract has been investigated. The result indicated that the order quantity would be less than or equal to the optimal order quantity of the risk neutral retailer. With the increase of risk, the order quantity will decline and when the risk is increasing to a certain value, the retailer will not order production from the manufacture. And in some cases the supply chain can achieve channel coordination by revenue-sharing contract.