Channel Contract Coordination for Supply Chain With Behavior Preferences Under Uncertainties

Abstract

This paper studies the coordination of a dual-channel supply chain with behavior preferences under uncertainties of yield and demand. According to an improved FS model and mean-CVaR (Conditional Value-at-Risk) criterion, we construct optimal decision models in the centralized and decentralized situations, and propose the joint contract of revenue-sharing and risk-sharing to coordinate the dual-channel supply chain. Furthermore, this paper investigates the effects of fairness concerns and risk-averse preferences on supply chain members’ profits and decisions, and studies the feasible region for joint contracts to achieve Pareto improvement. This paper finds that: 1 fairness concerns and risk aversion preferences exacerbate the double marginalization effect, 2 fairness concerns and risk aversion have a negative impact on manufacturer’s decision in a manufacturer-led dual-channel supply chain, 3 the possibility of joint contract to achieve coordination increases with the increases of degree of fairness concerns and risk aversion.

Keywords

• Supply chain
• channel coordination
• behaviors
• uncertainties