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Coordinating a dual-channel supply chain with risk-averse under a two-way revenue sharing contract

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  • Xu, Guangye
  • Dan, Bin
  • Zhang, Xumei
  • Liu, Can

Abstract

This paper investigates the impact of establishing a dual-channel supply chain coordinating contract when the supply chain agents are risk aversion under a mean–variance model. We present an analytical framework for marking price decisions in a centralized and a decentralized dual-channel supply chain with risk-averse, and we analyze the impact of risk tolerance on the manufacturer and retailer's pricing decisions. The results show that the price set by a risk-averse dual-channel supply chain is lower than the one set by a risk-neutral dual-channel supply chain. Furthermore, compared with a centralized system, the vertical and horizontal competition in a decentralized system tends to result in channel inefficiency. To achieve channel coordination, we propose a contract the two-way revenue sharing contract that we demonstrate by coordinating the dual-channel supply chain with risk-averse, and we analyze that how the risk attitude changes the parameters of the coordinating contract. In addition, it is found that the manufacturer can prompt the retailer to cooperate by providing such a contract, which not only coordinates the dual-channel supply chain but also ensures that both supply chain members achieve a win–win situation.

Suggested Citation

  • Xu, Guangye & Dan, Bin & Zhang, Xumei & Liu, Can, 2014. "Coordinating a dual-channel supply chain with risk-averse under a two-way revenue sharing contract," International Journal of Production Economics, Elsevier, vol. 147(PA), pages 171-179.
    • Handle: RePEc:eee:proeco:v:147:y:2014:i:pa:p:171-179
    DOI: 10.1016/j.ijpe.2013.09.012
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