Reconsideration of a negotiation procedure for buyback contract

Negotiation procedures between a supplier and a retailer in a supply chain model including buyback contract have been studied in recent years. The negotiation procedures in the above studies have consisted of three successive steps: (i) show the necessity that the conclusion of the contract based on a set of contract parameters brings respective incentives to both of the supplier and retailer, (ii) present a mutual relationship between contract parameters of guaranteeing simultaneously optimalities of both of the supplier and retailer, and (iii) determine a unique combination of contract parameters using the Nash bargaining theory. Through successive steps (i)-(iii), some sets of contract parameters have been screened step by step, and eventually, an optimal set of contract parameters has been uniquely decided in step (iii) as a bargaining solution. However, the mathematical significance of respective conditions derived in steps (i) and (ii) for the bargaining solution of step (iii) has not been fully explained. Therefore, we reconsider respective roles of steps (i) and (ii) in the negotiation procedure based on a supply chain model including buyback contract. Then, we confirm the usefulness of the negotiation procedure consisting of three successive steps in the preceding studies.