This study investigates the channel coordination issue of a supply chain with a risk-neutral manufacturer and a loss-averse retailer facing stochastic demand that is sensitive to sales effort. Under the loss-averse newsvendor setting, a distribution-free gain/loss-sharing-and-buyback (GLB) contract has been shown to be able to coordinate the supply chain. However, we find that a GLB contract remains ineffective in managing the supply chain when retailer sales efforts influence the demand. To effectively coordinate the channel, we propose to combine a GLB contract with sales rebate and penalty (SRP) contract. In addition, we discover a special class of gain/loss contracts that can coordinate the supply chain and arbitrarily allocate the expected supply chain profit between the manufacturer and the retailer. We then analyze the effect of loss aversion on the retailer's decision-making behavior and supply chain performance. Finally, we perform a numerical study to illustrate the findings and gain additional insights.

a b s t r a c tSupply chain coordination with transport service providers (i.e., carriers) is seldom explored. This paper adds a carrier to a supplier-retailer system and analyzes the effect of the two sources of double marginalization on pricing policies. We assume that lead time demand is stochastic, and shortage during the lead time is permitted. In addition, we assume that the annual average demand rate is a decreasing function of the retail price. Our analysis shows that joint profit increases because demand increases, whereas unit operating cost decreases as a result of joint coordination. The analytical results for the decentralized and joint decision models are obtained for a specific annual average demand rate. Nonlinear transport-fee and wholesale-price discount schemes, which can facilitate supply chain coordination, are then obtained using the profit sharing method. Finally, numerical examples are presented for illustrative and comparative purposes.

Most business-to-business transactions use external transport service providers (i.e. carriers) to improve supply chain performance and customer satisfaction. Supply chain coordination with transport service providers is seldom explored. The current paper adds a carrier to the supplier-retailer channel and analyzes the effect of double marginalization on pricing policies. The paper assumes that market demand is price-sensitive, which is a general decreasing function of the retailer's selling price. Analysis shows that the joint profit is increased because both the demand is increased and the unit operating cost is reduced as a result of joint coordination. The analytical results are obtained for a specific demand function, and the joint decision policy is coordinated through a nonlinear wholesale and transport pricing scheme. Numerical examples show that the joint coordination including the carrier can significantly improve the performance of the channel compared to the coordination only among the retailer and the supplier.

This paper investigates pricing and ordering as well as advertising coordination issues in a single-manufacturer single-retailer supply chain, where the manufacturer sells a newsvendor-type product through the retailer who faces a stochastic demand depending on both retail price and advertising expenditure. Under the assumption that the market demand has a multiplicative functional form, the Stackelberg and cooperative game models are developed, and the closed form solution to each model is provided as well. Comparisons and insights are presented. We show that a properly designed revenue-cost-sharing contract can achieve supply chain coordination and lead to a Pareto improving win-win situation for channel members. We also discuss the allocation of the extra joint profit according to individual supply chain members' risk preferences and negotiating powers.

This study considers a distribution channel consisting of a manufacturer with capital constraint and uncertain yield and a retailer that faces random demand. To maintain production, the manufacturer can either (1) avail bank credit financing from a perfectly competitive market or (2) request advance payment from the retailer. First, we establish two Stackelberg game models under bank credit financing (BCF) and advance payment mechanism (APM). By comparing the equilibrium strategies of the two financing models and the optimal profits of channel members, we conclude that APM is more advantageous than BCF in terms of improving channel performance. Second, we design a revenue sharing (RS) contract based on APM to achieve channel coordination. Finally, numerical analysis is presented to verify the conclusions obtained in this study.