Abstract: As the core technology of "Internet of Things", the adoption of RFID has been extended to supply chain management and also brought a great convenience. But now the fact is that the upstream firms invest but the downstream enterprises benefit in current situation, which greatly damages the initiative of upstream enterprises to adopt RFID technology. In order to improve the effective of supply chain with RFID technology, the reasonable cost allocation of RFID needs to be solved first. In this paper, considering several typical supply chain contracts which suit for different industries, the corresponding cost allocation models of RFID are established such as the wholesale price contract, revenue-sharing contract, buy-back contract. Through rigorous mathematical derivation, the cost thresholds at which RFID technology investment becomes profitable and get a reasonable region of cost allocation coefficient with different contracts are obtained. Further, a scientific allocation basis are providecl when the supply chain enterprises investing in RFID technology.

Key words: two-echelon supply chain, RFID technology, misplaced product, supply chain contract, cost allocation