Coordination of a supply chain with a loss-averse retailer under supply uncertainty and marketing effort

<p style='text-indent:20px;'>This paper deals with a one-period two-stage supply chain, in which loss-averse retailer facing stochastic demand orders products from risk-neutral supplier subject to yield uncertainty. Marketing effort exerted by the is employed enhance final market demand. We first establish performance benchmark, and show that wholesale price contract fails coordinate chain due effects of double marginalization loss aversion. Then we propose revenue-cost-sharing order achieve coordination. It verified properly designed can perfect coordination win-win outcome synchronously. Our results reveal it simple implement arbitrarily allocate total channel profit between supplier. In addition, examine effect retailer's aversion degree on parameters allocation, both benefit marketing effort.</p>