Downside Risk Measure - Triple Closed-loop Supply Chain Contract Coordination Under Study

The core idea of closed-loop supply chain management is "remanufacturing, saving, integrated, cooperation and win-win", which calls for each node in the supply chain to establish a relationship of mutual collaboration and mutually reinforcing. However, in the traditional supply chain management, each node makes decision independently aims to maximize the benefits respectively. The result of independent decision-making is that impede the whole supply chain to achieve Pareto optimal state. Therefore, it needs to design kinds of coordination mechanisms for integrating enterprise nodes and sign coordination contract between each other in order to achieve cooperation and all-win. As a new coordination mechanism, closed-loop supply chain coordination contract is attracting more and more attention and concern of scholars domestic and abroad. Especially, when the supply chain is at risk, how to take effective and preventive measures to avoid is a difficult problem and a challenge that faced of the enterprises in supply chain management. Consequently, this paper bases on whether the supply chain is at risk and different risk aversion under Downside-risk conditions in-depth study of the subject, the main research contents are as follows:1. At first,it does not consider the risk that the supply chain faced. It respectively considered from two aspects which are centralized decision-making decentralized decision-making based on Stackelberg game theory. The optimal order quantity that the enterprises of the supply chain make decentralized decision to arrive at does not meet the real "best". And thus, the entire supply chain is inconsistent. Furthermore, adding revenue sharing contract to coordinate the supply chain, and find the range of distribution parameter of income between the parties involved in the closed-loop supply chain.2. In this paper, a coordination contract between a risk-averse retailer and its upstream a risk-neutral supplier and a distributor in a three-stage closed-loop supply chain with Downside-risk constraints was designed and modeled. In the revenue sharing contract’s stimulation, the retailer’s Downside-risk constraints can not be met. So the supply chain can not be achieved the state of coordination. Hence, the risk sharing contract was designed to stimulate the retailer to increase the order quantity so that the risk conditions are satisfied under the condition of contract. Meanwhile, the benefits of participants in the supply chain all have increased, the risk-neutral party would provide a degree of risk protection for the risk-averse party.3. Compared to retailers, distributors in the middle which under the action of the bullwhip effect will have a greater uncertainty and the risk will be greater too. The three closed-loop supply chain which under the revenue sharing contract adds constraints of Downside-risk for the same, and redesign the new expansion contract under the condition that distributors’actual downside risk is greater than the maximum acceptable level. Discuss the two cases that the subjects of coordination contracts are suppliers and retailers, calculate the range of coordination price which ensure the effective of contract, and draw the Conclusion that while the incremental profit under the extended contract increases, the downside risk will be reduced to some extent.