Research on supply chain coordination with a risk-averse retailer under increasing marginal costs

This paper studies the incentive mechanism of supply chain coordination with a risk-averse retailer under the condition that a supplier´s and a retailer´s marginal cost functions increase with outputs. It studies the order strategy of a risk-averse retailer and a risk-neutral retailer, and the design of a supplier´s optimal contract. It finds out that the optimal order quantity of a risk-averse retailer is less than that of a risk-neutral retailer, and also finds out that a supplier must pay higher buy back contract price for a risk-averse retailer than for a risk-neutral retailer,and a supplier buy back the all residual order of a retailer. At last, we gives numerical results to verify the conclusions presented in this paper.