Supply chain coordination with options contract for the three-level pull supply chain

Abstract

A three-level pull supply chain composed by a manufacturer, a distributor and a retailer is considered to making use of the supply chain management coordination mechanism with options contract. Two models are proposed respectively. One is a supply management mechanism without applying options contract. The other is that with applying options contract. To the two models, corresponding analysis and calculation example are given. The conclusion is presented that the expected total profit with options is more than the other.

Supply Chain Coordination under Carbon Emission Tax Regulation Considering Greening Technology Investment

“…Ref. [ 41 ] indicated that the total profit of the supply chain with an option contract was more than that without a contract. Ref.…”

“… The stochastic demand has a risk-neutral equivalent cumulative distribution function , a probability density function , with mean value of µ and variance of [ 47 ]. In equilibrium, supply chain partners have positive demands and profits [ 41 ]. …”