Robustness of Supply Chain Coordination Contracts: Structural Result and Taxonomy

Project: Research

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Contracts are one of the most fundamental business instruments that suppliers and retailers have to deal with. The existence of double marginalization in the vertical supply chains and inventory competition in the horizontal supply chains has inspired considerable interests in designing and analyzing coordination contracts that optimize the performance of the associated supply chains. However, most existing studies focus on the design of coordination contracts, whereas investigations on their robustness are rare. It has been advocated that these robust properties have a great impact on adopting and implementing coordination contracts. For example, one of the most noticeable and publicized contracts is the buyback contract, which is robust in the sense of being flexible in dividing channel profit and being in the voluntary compliance regime. Therefore, in this project, we plan to set out research questions of the robustness of coordination contracts, namely 1) the robustness of the profit allocation with respect to the expected value and sample path, 2) the robustness of the competitive structure to coordination contracts, and 3) the robustness of contracting agents to the compliance regimes. We intend to identify structure properties and sufficient conditions for these robust properties. Our final aim is to develop the taxonomy of coordination contracts in terms of their robustness.


Project number9041730
Grant typeGRF
Effective start/end date1/08/117/07/15