Abstract: A three-stage supply chain composed of one manufacturer, one distributor, and one retailer is considered in this paper. The manufacturer supplies to the distributor short-life-cycle products with a wholesale price, the distributor supplies them with a wholesale price to the retailer, and then the retailer sells product to customers with a retail price. The retailer buys back customers false failure return products with a retail price, the distributor and the manufacturer reclaim the products from the retailer by stage. The retailer‘s effort has influence not only on demands but also on return rate. Under these conditions, the coordination function with rebate and penalty contract is analyzed. Then, coordination with rebate and penalty contract for such a supply chain is studied, in which market demand is changed under disruption. Result shows that this supply chain coordination may be broken off by a disruption. Thus, an optimal strategy for this supply chain to deal with the disruption is given and an improved rebate and penalty contract whith antidisruption ability is proposed. Finally, the proposed models are employed to examples with numerical analysis.

Key words: disruption, false failure returns, rebate and penalty contract, supply chain coordination