Mean-variance analysis for supply chain coordination with the combined contract

Contract is a mechanism to achieve the performance improvement or the optimization of supply chain system. This paper deals with the channel coordination problem for a short-life-cycle product under the uncertain demand. Firstly, the combined contract, which is used to stimulate the risk-averse retailer to order more products, is designed according to the case, where some firms sell their products with different marketing policies in different selling periods; Then, we depicts it with the mean-variance method and the stochastic dynamics programming and present the necessary condition to achieve the perfect coordination or the performance improvement of system. At the same time, the corresponding arithmetic to find the optimal contract parameters is also developed. Lastly, we conclude that the system performance improvement or optimization can be achieved with the combined contract, furthermore, under the higher uncertain setting, the supplier will be the active sponsor of this contract, while retailer will be the active responder.