Abstract: For a three-stage supply chain system which consists of single supplier with yield uncertainty， manufacturer with yield certainty and retailer with demand uncertainty under retailer risk aversion， a profit sharing contract model based on CVaR principles was established. The characteristics of centralization， decentralization and risk aversion model were compared， and a profit sharing contract coordination mechanism was proposed. The impact of yield and demand uncertainties on decision and expected profit was analyzed. Finally， the validity of contract coordination was presented by a numerical example. The results showed that the expected profit of decentralization can be proven to be at the level of that of centralization decision by the profit sharing contract. The goal of coordination is ultimately achieved for the three-stage supply chain system.

Key words: supply chain management, profit sharing contract, risk aversion, CVaR, coordination