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This paper studies a supplier-retailer chain problem with dual-soucing channels for the retailer: ordering from the supplier and producing by himself. Customers' demand is assumed to be linear. We And the buy-back contract can not coordinate our model. A numerical example indicates that the buy-back contract is a better strategy for both the supplier and the retailer than the wholesale price contract, and the supplier's participation increases the retailer's expected profit.
Date of Conference: 17-19 Sept. 2010