Abstract: A retailer collecting closed-loop supply chain (CLSC) which consists of one manufacturer and one retailer is studied in this paper. Using revenue and expense sharing contract, double marginalization problem in the decentralized decision-making CLSC can be solved, and benefits can be improved. In the case that demand is disrupted, the optimal decision results of centralized decision-making CLSC is compared to optimal decision results of retailer who is coordinated by the revenue and expense sharing contract. The revenue and expense sharing contract is effective in stable environment in decentralized decision-making CLSC,in which manufacturer bears the deviation cost. It is shows that the coordination of the decentralized decision-making CLSC is broken off. Parameters of revenue and expense sharing contract based on it coordinating mechanism are improved, and the improved contract can coordinate the decentralized decision-making CLSC under disruption as well in stable environment. Finally, numerical example is given to prove the main conclusion of this paper and illustrate the value of revenue and expense sharing contract.

Key words: closed-loop supply chain, double marginalization, demand disruption, revenue and expense sharing contract, coordination