Stackelberg Game in a Two-echelon Supply Chain under Buy-back Coordination Contract

In this study, we analyze the full-return coordination mechanism in a two-echelon supply chain, with either supplier or retailer in dominant position. Stackelberg game models are proposed, with symmetric information and price dependent demand considered. The Nash equilibrium solution can be derived. By simulation with Maple software, the model shows the relationship among the decision variables and how the decision variables influence the expected profit of supply chain members in different types of supply chain. Decision scenarios in three different types of supply chain, such as no-return, supplier-dominant full return, and retailer-dominant full return policies, are analyzed and compared. Finally, the model is applied to a numerical example. The result from the model analysis can provide decision support during buy-back coordination contracting process.