Research On Option Contract Considering Effort Factors In A Supplier-led Supply Chain

With the development of mobile Internet,information technology,new media and so on,the pursuit of life quality is becoming more and more high in the context of the current consumption upgrading in China.The companies with monopoly advantages and their own unique design,brand,technology and patent occupy an important position in the consumer's heart,and also occupy a dominant position in the supply chain.However,the development of technology also makes it possible for industries such as consumer electronics,electronics and fashion to sell products as soon as possible due to the short life cycle of products.Therefore,downstream retailers need to pay more efforts to develop the market and improve the market demand.In reality,the effort factor is one of the important factors that affect the market demand.The sales efforts of the retailers include increasing the intensity of brand advertising,recruiting more marketing personnel,and strengthening the business training and other measures to improve the sales volume.However the retailer's sales effort requires cost,in general,these costs are independently undertaken by the retailer.Although retailers' efforts behavior expanded the market demand,the supplier also benefited from retailers' efforts.Therefore,in order to effectively motivate the retailers to make greater efforts,the suppliers must compensate the retailers' efforts.Based on this contradiction,this paper studies how the supplier can encourage the retailers to invest more through the option contract and achieve the coordination of supply chain under the background of the demand is uncertain and related to the degree of effort.First of all,this paper discus the retailer's sales efforts in independent decision-making behaviors,study found that suppliers have the power to improve the level of effort by using contract,so as to realize the pareto improvement.Thus,the improvement of Pareto is realized.Secondly,when both the suppliers and retailers are risk neutral,suppliers can motivate retailers' sales effort through options and restrictive return contracts.In the situation that the supplier must meet the retailer's ordering demand,we construct the compound contract of option,return contract and effort cost sharing.Then the decision behavior of the supply chain participants is analyzed and the parameters of contracts are realized when the supply chain is coordinated.Further,we study the supply chain coordination problem when supply chain members have risk aversion characteristics.Two combinatios are building : a risk aversion retailer-risk neutral supplier and a risk supplier-risk neutral retailer,then we analyze how the loss-aversion characteristic influence the contract.It is found that the composite contract model can realize the coordination of the supply chain or pareto improvement,and the contract parameters need to be satisfied when the supply chain realizes coordination.Finally,through the numerical analysis,the influence of various contract parameters on the effort behavior of the supply chain is studied,and the correctness and rationality of the theoretical derivation is verified.