Supply chain coordination aims to streamline performance across all participating entities. However, it regularly encounters obstacles, such as the double marginalization effect, which can lead to notable inefficiencies. There's a wealth of research focused on contract coordination within supply chains, yet there is a gap regarding the exploration of multi-period models. These models are essential as they account for prolonged, often long-term collaborations between entities which reflect real world co-operations better.
In this thesis, we look into this area by modeling the dynamics of a two-echelon supply chain that spans across multiple periods. We incorporate various elements like fluctuating demand patterns and an the possibility for an optional investment that can be made by the supplier to decrease unit costs. Our investigations revealed that a major source of inefficiency within these models is the presence of asymmetric information, where one party has more or better information than the other. To mitigate these inefficiencies, we introduce a model where the supplier, the party with better information, takes the lead in initiating the contract. Alongside this, we also explored the potential of an alternative contract approach, namely a revenue sharing contract. Although the revenue sharing contract did not alter the overall performance of the supply chain, even if it better distributed risk, the act of modeling the supplier to lead negotiations proved effective in removing all supply chain inefficiencies. A consistent theme that emerged in our research is the impact of information sharing in various ways among supply chain partners to reduce deadweight loss.