Buy Back Contracts in Supply Chain under Emergence and Asymmetric Information

Abstract

Abstract: A supply chain composed of one manufacturer and one retailer with market demand uncertainty is addressed in this paper. After coordination function with buy back contract is analyzed, the supply chain coordination by using buy back contract is studied in considering that emergency occurs such that market demand and retailer's marginal cost are changed with asymmetric cost information. Result shows that the supply chain coordination can be broken off by an emergency. Thus, an optimal strategy for such a supply chain to handle emergency is proposed. By this strategy, a buy back contract is adjusted such that it has the ability to effectively response to an emergency. Numerical examples are used to show application of the proposed method. 

Key words: emergency, asymmetric information, buy back contract, supply chain coordination

Cao Xi-yu, Qin Yan-hua. Buy Back Contracts in Supply Chain under Emergence and Asymmetric Information[J]. Industrial Engineering Journal , 2012, 15(5): 99-104.

References

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