Quantity discount contract in closed loop supply chain on the theory of downside-risk

In order to study the impact of risk aversion on the supply chain, a two-echelon closed loop supply chain model with a risk-neutral supplier and a downside-risk-averse retailer was established, and the supply chain wasn´t coordinated on the theory of downside-risk control. By using of the method of the supply chain coordination, a risk-sharing contract composed of quantity discount contract and return policy was designed. The contract could not only offer the desired downside protection to the retailer, but also provide more profits to the agents, and accomplish channel coordination. Lastly, through a numerical example, the effectiveness and feasibility of the risk-sharing contract is verified.