Buy-back contracts of retailer risk aversion under asymmetric information of production cost

LIU Lang, WANG Hui, HUANG Donghong

Systems Engineering - Theory & Practice ›› 2021, Vol. 41 ›› Issue (1) : 113-123.

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Systems Engineering - Theory & Practice ›› 2021, Vol. 41 ›› Issue (1) : 113-123. DOI: 10.12011/SETP2019-0535

Buy-back contracts of retailer risk aversion under asymmetric information of production cost

  • LIU Lang, WANG Hui, HUANG Donghong
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Abstract

To explore the internal law of secondary supply chain coordination by buy-back contract under the condition of price randomness and retailer risk aversion with asymmetric production cost information. A buy-back contract model under new conditions is constructed and solved to analyze the impact of information asymmetry and risk aversion on each decision variable in the supply chain. The simulation results show that under the condition of price randomness, no matter the information is symmetrical or not, as long as the retailer has risk aversion, every decision variable in the supply chain will have bifurcation mutation. No matter whether the retailer is risk averse or not, the asymmetric information of production cost will bring additional benefits to the supplier, but it will damage the benefits of the retailer and the whole supply chain as well. The more asymmetric the information is, the greater the amplitude of various decision variables in the bifurcation mutation region will achieve. The conclusion is that the bifurcation mutation is a special phenomenon after the price randomness and the participants' risk aversion coupling. Supplier can generate additional revenue by withholding private information, but at the expense of retailer and supply chains; The best way for retailer to deal with the asymmetric information of production cost is to make the information of production cost transparent at the lowest cost. Retailer face various external risks with a stable attitude, which is more conducive to scientific decision-making.

Key words

stochastic market price / asymmetric production cost information / risk aversion / buy-back contract / bifurcation mutation phenomenon

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LIU Lang , WANG Hui , HUANG Donghong. Buy-back contracts of retailer risk aversion under asymmetric information of production cost. Systems Engineering - Theory & Practice, 2021, 41(1): 113-123 https://doi.org/10.12011/SETP2019-0535

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Funding

National Natural Science Foundation of China (71562013); Natural Science Foundation of Jiangxi Province of China (20181BAA208041)
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