Abstract:Managers at all stages of a supply chain are concerned about meeting profit targets.We study contract design for a buyer-supplier supply chain, with each party maximizing expected profit subject to a chance constraint on meeting his respective profit target. We derive the optimal contract form (across all contract types) with randomized and deterministic payments. The best contract has the property that, if the chance constraints are binding, at most one party fails to satisfy his profit target for any given demand realization.This implies that “least risk sharing,” i.e., minimizing the probability of outcomes for which both parties fail to achieve their profit targets, is optimal, contrary to the usual expectations of “risk sharing.” We show that an optimal contract can possess only two of the following three properties simultaneously: (1) supply chain coordination, (2) truth-telling, and (3) non-randomized payments. We discuss methods to mitigate the consequent implementation challenges. We also derive the optimal contract form when chance constraints are incorporated into several simpler and easier-to-implement contracts. From a numerical study, we find that an incremental returns contract (in which the marginal rebate rate depends on the return quantity) performs quite well across a relatively broad range of conditions.

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邓世名教授，2003年获得加州大学伯克立分校工业工程和运筹学博士学位。2004年到2009年作为高级工程师和项目掌管人在美国加州甲骨文公司（Oracle）总部，从事基于运筹优化算法的先进出产规划与供给链治理系统研发工作。2009年至今为华中科技大学治理学院教授，博士生导师。入选湖北省楚天特聘学者，2009教育部“新世纪”优良人才打算、湖北省百人打算，第二批湖北武汉东湖高新科技开发区“3551”人才打算，湖北省政协委员。对治理科学的理论和现实问题有深刻的理解，钻研成就颁发在Management Science,Operations Research,EJOR,IEEE Transactions,IJPE，《治理科学学报》等国内表治理科学与运筹学领域的一流期刊等杂志上。邓世名教授有13年海表的科研和美国顶尖公司的工作经历，曾为美国Oracle公司、FedEx Ground、世界第一的优化软件供给商ILOG和顶尖的半导体检测设备出产商KLA–Tencor承担项目。主持国度天然科学基金面上项目2项，以子课题掌管人身份参加国度天然科学基金沉大国际合作项目一项。屡次在治理科学和运筹学INFORMS、服务运营治理学会MSOM年会上作汇报。