Analysis on supply chain coordination based on option, Price-Subsidy Contract and technology innovation

The paper considers one manufacturer and one retailer supply chain under supply and demand uncertainties. The paper first analyzes the Price-Subsidy Contract model based on option, and the retailer´s optimal decision is obtained when the supply chain realizes coordination. Then, it introduces the factor of technology innovation to discuss the effect on the supply chain. The results show that the technology innovation can improve the model. The numerical calculation illustrates that option and technology innovation play a major role in improving the total profit and coordinating the supply chain.