Abstract: A two-echelon supply chain system with a manufacturer and a retailer is considered, using a Newsvendor model, the players' profit models are built under four scenarios (the supply chain does not adopt RFID technology; Only the retailer adopts RFID technology; Only the manufacturer adopts RFID technology; And the supply chain players adopt RFID technology together)and get the Stackelberg equilibriums and the players' optimal expected revenues. Then the effect of the players' revenue with the investment on RFID technology is discussed and the coordination strategy is obtained when the supply chain players adopt RFID technology together. It is found that whether the adoption of RFID technology by the retailer or the manufacturer will always improve both players' profits when the cost of RFID tag and the rate of inventory inaccuracy are lower than the thresholds. Furthermore, the revenue sharing contract can coordinate the supply chain which both the players adopt RFID technology, and it improves the application theory of RFID technology and it is valuable and significant in supply chain's operations.

Key words: two-echelon supply chain, asymmetric information, inventory inaccuracy, RFID technology, decision-making, coordination