In a supply chain led by a supplier, the supplier always can employ contract mechanisms to coordinate the supply chain(SC) so as to improve efficiency of the channel. In many cases, the supplier can make use of different kinds of distribution channels, such as direct channels and indirect channels, hereafter refered to as centralized SC and decentralized SC respectively, to deliver commordities to the terminal market. Does there exist differences in contract arrangement in the two channels?The issue on coordination of the SC is investgated via buy-back contracts, where the supplier has a direct channel and an indirect channel, both with a risk-averse retailer. A model including two stages of game is constructed, where the aversion of the retailers are measured by the conditionally risk-at-value (CVaR), and the supplier maximizes expected profits of the entire SC and its own, respectively, in the centralized SC and the decentralized SC. The model is solved out by backwards solving techniques. Necessary and sufficient conditions are characterized to coordinate the channel via buy-back contracts in the centralized SC. The optimal buy-back contracts are solved out in the decentralized SC. Furthermore, a comparative analysis is presented on the buy-back contracts between the two channels. It shows that the supplier tends to set a higher wholesale price or a lower buyback price in the decentralized SC than that in the centralized SC, which leads to that the retailer orders less than the optimal order quantity for the sake of the entire SC. Furthermore, a sensitivity analysis is made on the impact of the retailers' risk aversion on parameters of buy-back contracts, the retailer's ordering decision and the supplier's payoffs. It shows that the supplier always tends to set a lower wholesale price, given the buy-back price, and attains a smaller expected profit, whether in the centralized SC or in the decentralized one, if the retailer becomes more risk-averse. Therefore, the supplier is more willing to cooperate with retailers with a low risk aversion degree. Finally, an example of Li Ning Co is used to illustrate application of the theoretical model in the real world. Numerical tests are exerted to verify the conclusions including:(1)how strategies of the channel members, and payoff of the entire SC and its members change with the optimal contracts varing, (2)how the risk aversion of the retailers affect strategies of the channel members and payoff of the entire SC and its members, (3)how to determine the optimal contract parameters, and so forth. To consider simultaneously centralized SCs and decentralized SCs, not only a new research perspective is introduced for contract coordination literature theoretically, but also managerial insights are provided for supply chain contracting on the practical level.
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