Downside-Risk Based Closed-Loop Supply Chain Coordinated by Two Third-Party Collecting Logistics

Abstract

In the context of a risk-neutral supplier, a downside-risk retailer and two third-party logistics suppliers, a downside-risk closed loop supply chain model is established by using game theory, and the impact of revenue-and-expense sharing contract is analyzed in the channel, which shows that the contract may not coordinate such a channel on the theory of downside-risk control. Also, a risk-sharing contract which is composed of revenue-and-expense contract and return policy is designed that offers the desired downside protection to the retailer, provides more profits to the agents, and accomplishes channel coordination. Moreover, a case is given for justifying the effectiveness and feasibility of the risk-sharing contract.