The supply chain coordination with buy-back contracts considering the different salvage value

This paper analyzes the effect of the different salvage value on the coordination of a supply chain in which a risk-neutral manufacture sells a single product to a risk-neutral retailer. The analyses show that shows that, when the salvage value of retailers surplus products is less than or equal to that of manufacturers, buyback contracts can coordinate the supply chain; When the salvage value of retailers surplus products is greater than that of manufacturers, only buyback contracts cannot coordinate the supply chain, while subsidy contracts can realize supply chain coordination effectively.