Abstract: The development of modern science and technology improves efficiency and shortens product cycle. At the same time, however it brings about the uncertainty and increased risk of supply chain. In recent years, researches on the uncertainty of supply chain output and demand are gradually concerned by scholars. But the researches were conducted usually under the assumption of the neutrality of a risk without consideration of the influence of risk preference on decision makers. In reality, decision makers usually show the characteristics of risk preference. In the paper, a three-echelon supply chain system is discussed, which consists of single supplier, manufacturer and retailer with risk aversion under yield and demand uncertain conditions. The optimal decision models of supply chain system are established under the mechanism of centralization and decentralization. The combined contract is applied to coordinate the three-echelon supply chain system mentioned above. Contract mechanism is the common method used in supply chain coordination. A risk-sharing contract and a GL contract are introduced to coordinate supply chain against the deficiencies brought about by the use of single contract to coordinate the three-echelon supply chain. The GL contract is the improved profit-sharing contract, including both gains and losses of supply chain members. The contract mechanism is described as follows:①the GL contract is applied between manufacturers and retailers, with a parameter(β,γ).β is manufacturers' profit sharing proportion to retailers, and γis sharing proportion of manufacturers' losses to retailers. The profit proportion of retailers is (1-β), and the loss proportion is (1-γ). ②the risk-sharing contract is applied between suppliers and manufacturers. The following conclusions are achieved by the analysis of the number example. First, the expected profit of supply chain decreases with the increase of demand uncertainty(λ). Second, the expected profit of supply chain increases with the increase of random output factor(σ)of manufacturers and suppliers. Finally, the expected profit of retailers decreases with the increase of degree of risk aversion. The order quality of retailers changes with the increase of risk aversion. The validity of models and contract coordination is illustrated by a numerical example.

Key words: supply chain coordination, yield and demand uncertainty, risk aversion, combined contract