Abstract: To better match the demand with supply and improve enterprise's profit as well as service level, optimal decisions based on combination of contract order and spot market under double channel supply chain situations are discussed. Firstly, pure wholesale contract for the optimal order quantity is analyzed. Based on that, by consideration of one-way and two-way trading patterns, buyback contract and quantity flexibility contract are introduced into one-way spot market and three order models are designed, which are order model combining buyback contract with replenishment of the spot market, order model combing quantity flexibility contract with spot market selling pattern and order model combining wholesale price contract with two-way trading patterns of spot market. As for these models, some parameters on affects of supply chain performance are analyzed, such as buyback price, cost of out of stock, replenishment costs, spot price and its volatility and risk preference for vendors. Finally, through the numerical simulation, impact of different spot markets on vendor revenue is analyzed. It is proved that combination of contract order and two-way spot market enables to take advantage of real-time trading of spot market and improve the supply chain profit. Combination of contract order and one-way spot market although enables to improve supply service level and reduce inventory risk. However, buyback price and replenishment price need to be considered, causing certain amount of risk. Combination of one-way or two-way spot market and contract order can make more revenue than just contract order.

Key words: supply contract, spot market, mixed dual-channel, optimal order decision