Study of the insurance contract based on supply chain members attitude towards risk
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Abstract
Considering that the traditional supply chains wholesale price mechanism cant coordinate the supply chain, which leads to poor profits for both the supplier and retailer, from the perspective of supply chain members attitude towards risk, a supply chain contract was proposed which combines the insurance mechanism. The contract is based on the wholesale price mechanism model, introducing two characteristic parameters (insurance price r and the retailer bear the risk of loss proportion θ) to characterize the uncertainty of market demand. Our study has shown that the introduction of the contract can coordinate the supply chain and improve the overall profits. In addition, the effects of agents risk preferences and negotiating powers on the distribution of supply chains excessive profits were also investigated.
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