A Study on Supply Chain Coordination under Risk of Random Yield

The problem of supply chain coordination with risk of random yield is studied.We assumed that the retailer only receives a random fraction of its order from the supplier and faces to price-dependent demand.First,the centralized and decentralized decision model under random yield risk is proposed,and the impacts of the mean of random yield on pricing decisions of the supplier,ordering decision of the retailer and the overall profits of the supply chain or each party in the chain,is analyzed.The analysis show that the supplier's wholesale price decreases as the mean of random yield,the retailer's optimal order quantity increases first and then decreases,both of the profits of each party and whole supply chain increase.Then,the effect of revenue sharing and linear compensation on coordinating supply chain is discussed.The results show that linear compensation cannot effectively coordinate supply chain with risk of random yield,while revenue sharing mechanism does really enhance the overall profit of supply chain or each party.