Study on revenue sharing contract mechanism in supply chain under Mean-Variance framework

The revenue sharing contract mechanism of a two-level supply chain including one manufacturer and one retailer under the Mean-Variance (M-V) framework was researched. Firstly, the necessary and sufficient conditions for coordinating the centralized supply chain were established analytically. Then in the decentralized setting with a pre-negotiated and determined profit sharing ratio, it was proved that if the demand model satisfied the increasing generalized failure rate (IGFR) property, there would exist an unique equilibrium of the Stackelberg model. Finally, with a numerical example, the influence on the related variable of the supply chain when changing the risk aversion coefficient and the standard deviation of market demand was analyzed.