Coordinating the Threelevel Supply Chain with  Combined Contracts under Demand Uncertainty

The problem of how to coordinate a twolevel supply chain with contracts has been discussed in most literature, but supply chain is often consisted of more than two separate entities in fact. This paper aims to study coordination in a threelevel supply chain which consists of a manufacturer, a wholesaler anda retailer under stochastic demand. The wholesaler transacts with the retailer by providing a buy back contract and the manufacturer transacts with the wholesa ler by a profitsharing contract. In this case the paper designs a coordination mechanism and validates that the different divisions of channel profit can be realized by tuning contract parameters. Finally, the validity of the contract mechanism is illustrated by a numerical example.