Abstract: As the environment of buyers' market, product has more and more timeliness, and its life cycle is more and more short. In order to avoid risk, dealers often don't book their order at the actual predicted quantity. In this paper, considering the fact and the idea of existing quantity flexibility contract , in view of incentive compatibility theory and SCM theory, buyback contract method is introduced, then a optimization model of supply chain flexibility contract is put forward which can incent dealer and make up the deficiency of single flexibility contract. An example is given to test the hypothesis model. The results show that, through adjusting wholesale price and rebate proportion to guide dealer's order tendency, when dealer's most order quantity by the expected profit equal market average demand, dealers would estimate objectively future demand then report the manufacture accurately, on this basis, the manufacture still determine the wholesale price and rebate proportion to make its maximum profits. This method can drive that manufacturer and dealer share the market risk in the supply chain, and make great efforts to optimize their whole supply chain together.

Key words: timeliness, supply chain, incentive compatibility, flexibility contract, buyback contract