A decentralized supply chain It is one in which each entity in the supply chain – manufacturer, retailer, intermediary – is free to make its own decisions operational. However, these decisions do not necessarily all have to be in the best interests of the entire supply chain, but are generally made with the best interests of each individual entity in mind.a) Recent literature on coordination of the supply chain with contractsOptimal supply chain Performance requires the execution of a precise set of actions that are not always in the interest of the different members of the supply chain, who are most often interested only in optimizing their own objectives (Cachon et al. (2003)). Optimal supply chain performance can be achieved if companies coordinate by contracting a set of transfer payments designed to align each company's objective with the supply chain objective. This mechanism is called decentralized supply chain coordination using contracts. In the following, we review some of the important contracts found in recent supply chain literature, the important assumptions made when deriving the different contract types, the practical use, and limitations of each type. of contract. Through this section, we aim to develop an essential vocabulary of the state of the art in supply chain contracts and use this knowledge to develop optimal and coordinated contract structures for the problems in this thesis. (Cachon et al. (2003)). Wholesale Pricing Contract: With a wholesale pricing contract, the supplier charges the retailer a fixed price per unit of product purchased. Larivière and Porteus (2001) analyze a wholesale price contract in the context of the press seller model. They consider that a manufacturer producing a single good in a paper market......estimates the probability of achieving a certain objective. They obtain contracts based on the Pareto optimality criterion, which is again different from the Nash equilibrium criterion usually used to derive optimal contract parameters. The authors establish a definition of a Pareto contract as follows: “In a contractual form, a contract is said to be Pareto if its set of parameters is Pareto, that is to say there is no set of alternative parameters such that no agent is in a more unfavorable situation and at least one agent is doing significantly better. They also note that Pareto contracts do not coordinate a supply chain, because there is one agent who is always strictly better off than other agents and for a contract to coordinate a supply chain we need that agents' optimal actions under the contract lead to Pareto optimality for the supply chain as a whole, not for an individual agent..