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Selection of Supply Chain Contracts: The Case of Option Contracts

In: Contract Analysis and Design for Supply Chains with Stochastic Demand

Author

Listed:
  • Yingxue Zhao

    (University of International Business and Economics)

  • Xiaoge Meng

    (Beijing University of Aeronautics and Astronautics)

  • Shouyang Wang

    (Academy of Mathematics and Systems Science)

  • T. C. Edwin Cheng

    (The Hong Kong Polytechnic University)

Abstract

Chapter 7 focuses on exploring issues concerning supply chain contract selection/implementation with the option contracts under consideration. From existing research it is known that various contracts have been developed to attain supply chain coordination and ensure arbitrary allocation of the resulting coordinating profit. However, since the extents to which the individuals involved improve their profits are different with different coordinating contracts, an important issue that remains to be resolved is how to select a coordinating contract that is acceptable for all the contracting partners. In Chap. 7 an effort to address this issue is made with the consideration of option contracts. In this research, the cooperative game approach is taken to consider the supply chain coordination issue with option contracts and to develop the contract negotiation model, taking into account supply chain members’ risk preferences and negotiating powers. The negotiation models developed with the option contract can be easily extended to other types of contracts such as the buyback contract, the revenue-sharing contract, the sales-rebate contract, etc. In this sense the research of this chapter presents a theoretical modeling framework for the selection/implementation issue of supply chain contracts.

Suggested Citation

  • Yingxue Zhao & Xiaoge Meng & Shouyang Wang & T. C. Edwin Cheng, 2016. "Selection of Supply Chain Contracts: The Case of Option Contracts," International Series in Operations Research & Management Science, in: Contract Analysis and Design for Supply Chains with Stochastic Demand, edition 1, chapter 0, pages 145-167, Springer.
    • Handle: RePEc:spr:isochp:978-1-4899-7633-8_7
    DOI: 10.1007/978-1-4899-7633-8_7
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