Abstract: A supply chain consisting of a supplier and a retailer is considered in this paper.To coordinate such a supply well,a novel option contract mechanism is established.In this mechanism,the retailer is the leader and proposes the option contract,while the supplier is the follower and purchases the option.The mathematical expectation of the inverse function of the credibility function is adopted for optimization.The simulation experiment demonstrates that the proposed mechanism can coordinate the supply chain well.

Key words: supply chain coordination, supply chain contract, option contract, retailer-led, innovation investment, fuzzy environment