Coordinating Three-Level Supply Chain under Disruptions Using Revenue-Sharing Contract with Effort Dependent Demand

Abstract

Considering that the market demand is stochastic and dependent on effort, this essay shows that the benchmark revenue-sharing contract could not coordinate a three-level supply chain consisting of one manufacturer, one distributor, and one retailer. By assuming that the retailer himself bears the effort cost, coordination is achieved by implementing revenue-sharing contract based on rebate and penalty policy in one transaction or two transactions of three-level supply chain, and the former is a special case of the latter. When the disruptions induce the changes of the market demand, the revenue-sharing contract could not coordinate the supply chain. To deal with the problem, this essay introduces two forms of improved revenue-sharing contracts which have antidisruption ability. The model of improved revenue-sharing contract is optimized when the market demand is in the additive form with effort dependent demand. Formulas are given to calculate the optimal contract parameters. Finally, this essay demonstrates the accuracy of the model of improved revenue-sharing contract with the help of numerical examples.

Optimization and Coordination of Crowdsourcing Supply Chain in Fast Fashion Industry

“…The other body of literature is concerning the supply chain's coordination, which avoids the double marginalization effect. Markdown/revenuesharing/buyback is normally adopted in supply chain management with an aim to obtain a win-win outcome [23]. Elmaghraby et al [24] examined the optimal markdown policy for the rational market with a short life cycle product.…”

Research on Coordination Complexity of E-Commerce Logistics Service Supply Chain

“…For instance, Zhong et al [27] expanded from a two-level supply chain composed of an E-commerce platform and a logistics service provider to a three-level supply chain composed of an E-commerce platform, an express company, and a terminal distributor and studied the profit distribution scheme based on revenue sharing contract in the e-commerce environment. Pang et al [28] studied the revenue coordination of a three-stage supply chain consisting of a manufacturer, a distributor, and a retailer. Hou et al [29] focused on a three-echelon supply chain composed of a manufacturer, a distributor, and a retailer for a single selling period.…”

“…In this study, the E-commerce mall is the main leader, and the express company and the terminal distribution service provider are the followers. Based on Stackelberg's game theory, the E-commerce mall determines the unit price of the product p and then the express company decides the unit price of transportation service W B and the effort level of logistics service s, and the terminal distribution service provider determines the unit delivery price W C [28].…”

Coordination of Time‐Varying Price Supply Chain with Inequity‐Averse Retailers

“…Supply chain coordination is the ultimate goal of supply chain management. Contract coordination is an effective way and many scholars have studied the issue of contract coordination [11][12][13][14][15][16][17][18][19][20][21]. Wholesale price contract is the simplest form.…”