Analysis of Revenue Sharing Contracts with Uncertain Demand in Supply Chain

Abstract

Nowadays many new special marketing characteristics under network economy made the individual businesses no longer compete as stand-alone entities but rather as supply chains. The coordinated supply chains are becoming an integral part of the competitive landscape as firms seek to create strategic advantages. Supply chain coordination with contracts has been being the focus of supply chain management research. More and more literatures involved in supply chain contracts show the incremental profits due to the supply chain coordination, which is very sensitive to uncertainty of customer demand. Furthermore, sometimes most of incremental profits should be collected to one party. Hence the supply chain revenue sharing problem has been being more and more important in supply chain contracts research. The issues addressed in this paper converge on the supply chain contract coordination with revenue sharing contract based on the two-echelon supply chain facing uncertain demand. And it seeks to analyze critical contract clauses and rational allocations of revenue sharing contracts to optimal supply chain performance.