Coordinating Two-Level Supply Chain with Risk-averse Preferences Based on Revenue-sharing Contract

Revenue-Sharing (RS) contract is a kind of mechanism to improve the performance or to achieve the perfect coordination of supply chain (SC). In this paper, considering that supplier and retailer has risk-averse preferences respectively, we propose a model of an SC contract aimed at coordinating a two-level SC, which is based on revenue sharing mechanism, and the customer demand is stochastic. Then by analyzing the model, the paper explains that how the risk-averse preferences of supplier and retailer influence the optimal order quantity, the optimal wholesale price, the quota of the revenue sharing and SC coordination. The result shows: if the risk-averse of the retailer (or the supplier) can be controlled within the specific limits, the RS contract also can coordinate SC by tuning its parameters.