A Collaborate Contract to Retain Long Term Relationship and Quality Improvement in Supply Chains

This paper builds a new collaborative contract that stresses on long-term relationship between a single supplier and a single retailer in a supply chain. This relationship is based on commitment and trust within the supply chain. Both participants of the supply chain take effort to improve quality. The objective function of the proposed model is to maximize the total revenue of the supplier as well as that of the buyer. The new contract takes the quality issue in addition to the unobservable commitment issue into consideration.