In this study, we build a new contract- collaborative contract that stresses on long-term relationship between a single supplier and a single retailer. This relationship is based on commitment and trust within the supply chain. The mathematic expression takes the form of the standard moral hazard model. The objective function of our proposed model is to maximize the total profit of the supplier with the constraints to ensure the feasibility and optimality of the buyer. The new contract takes the quality issue and the unobservable commitment issue into consideration.
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