Coordination of Agricultural Products Supply Chain with Stochastic Yield by Price Compensation

In this paper, coordination problem of agricultural products supply chain with stochastic yield is studied based on prices compensation strategy. The agricultural producing is influenced by the natural conditions, and the yield is uncertain. While agricultural products is rigid demand goods, the fluctuations of yield cause greater volatility of prices. The two- echelon supply chain with one supplier and one retailor is studied, and the mathematical model is constructed. The model showed that prices compensation strategy is Pareto improvement for agricultural products supply chain with stochastic yield, and it also incentive agricultural products supplier to rise the production plan and balance the profit allocation of supply chain.