Channel coordination with a risk-neutral supplier and a downside-risk-averse retailer

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journalpeer-review

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Original languageEnglish
Pages (from-to)80-89
Journal / PublicationProduction and Operations Management
Issue number1
Publication statusPublished - Mar 2005
Externally publishedYes


We investigate how a supply chain involving a risk-neutral supplier and a downside-risk-averse retailer can be coordinated with a supply contract. We show that the standard buy-back or revenue-sharing contracts may not coordinate such a channel. Using a definition of coordination of supply chains proposed earlier by the authors, we design a risk-sharing contract that offers the desired downside protection to the retailer, provides respective reservation profits to the agents, and accomplishes channel coordination. © 2005 Production and Operations Management Society.

Research Area(s)

  • Coordination, Downside risk, Risk sharing, Supply chain management, Value at risk