Coordination contract design for a two‐echelon supply chain considering risk aversion and yield uncertainties

Abstract This study establishes a two‐echelon supply chain (SC) wherein the supplier and the manufacturer suffer from yield uncertainty, and the supplier has a risk‐averse attitude. The SC members’ optimal input quantity and order quantity are investigated. On this basis, the revenue‐sharing and subsidy contracts are introduced to achieve SC coordination. The findings indicate that the two contracts are valid on SC coordination, and there exists a one‐to‐one relationship between these two contracts. Moreover, the two contracts can achieve the same utility allocation between the SC members under specific conditions. Overall, our findings help the SC members develop more efficient cooperation mechanisms.