Abstract:

Ordering through flexible option has increasingly become one of the main ways to improve the efficiency of supply chain operations in practice. It aims to investigate the optimal decision-making process in green supply chain when flexible option， forward contract or a combination of both are adopted by the members. Firstly， based on the “flexible option + forward contract” hybrid decision-making model， it divides the decision-making process of green supply chain into two stages： ordering and contract execution. Secondly， it determines the expected revenue function of the members on the basis of clarifying the decision-making mechanism of the green supply chain. Thirdly， it determines the optimal decision-making of each member when the supplier only provides flexible option or hybrid contract through mathematical derivation. Finally， through simulation analysis， it compares and studies the collaborative influence of product recovery value， forward and option contracts execution price on decision-makers under different contract conditions. The results illustrate that： （i） Under the premise that the supplier provides a hybrid contract ordering method， the expected revenue of “flexible option contract only” is higher than that of "forward contract only". The supplier can adopt the strategy of increasing the execution price forward contract and guide the retailer to choose the flexible option contract. （ii） Provided that the supplier only provides the flexible option contract， when the option contract execution price is high and the product recovery value is low， the forward contract is the optimal purchasing strategy for the retailer. However， the retailer's revenue will be reduced if he adopts the flexible option contract. The supplier can encourage the retailer to adopt the flexible option contract through the revenue-sharing mechanism. The methods and findings of this paper can help solve the problem of coordination mechanism of green supply chain，and reduce the negative impact of double marginal utility.

Key words: green supply chain, flexible, option, forward, executive price