Abstract:  In a two-stage supply chain for perishable goods constituted by a single market manufacturer and retailers who are updating the market needs at the beginning of sales, manufacturers adopt a two-stage production which only allows the retailers to make the order once, and manufacturers and retailers share the shortage cost in case of the shortage situation. Analysis is made to indicate how the level of shortage cost-sharing impact the supply chain, and examples are used to verify the results. Research shows that there is a positive correlation between the level of shortage cost-sharing and ordering quantity, and a negative correlation with the retailers profit. Through the introduction of the option contract, the supply chain achieves Pareto improvement.

Key words:  , supply chain； option contracts； shortage cost sharing； perishable goods； demand information updating