Comparing the Effectiveness of Supply Chain under Two Contract Mechanisms: Buy-back and Wholesale Price
Keywords:
Supply Chain Coordination, Buy-back Contract, Wholesale Price, Contractual MechanismsAbstract
Buy-back and wholesale price contracts represent critical coordination mechanisms in supply chains, playing a significant role in enhancing supply chain effectiveness. This research, through a comparative analysis of theoretical frameworks and practical evidence, demonstrates that buy-back contracts generally outperform wholesale price contracts, particularly in reverse supply chains and for perishable products. This superiority originates from the higher flexibility of buy-back contracts in allocating risks among supply chain partners. In high-uncertainty environments, buy-back contracts exhibit stronger effectiveness through risk-sharing mechanisms, whereas in supply chains with stable demand, wholesale price contracts may be more suitable due to their simplicity in implementation. On the other hand, adopting a hybrid mechanism that combines both contract types can lead to improved coordination and greater overall effectiveness of the supply chain. Future studies may focus on behavioral factors, the influence of emerging technologies, and the adaptation of these mechanisms within more complex supply chain structures.
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