Coordinating a Dyadic Fashion Apparel Supply Chain Using a Specially Designed Buyback Revenue Sharing Contract

Abstract

Fashion apparel supply chain remains an area of interest for both academicians and practitioners. Since its inception, the growth potential of the fashion apparel supply chain is affected due to the several issues such high demand volatility of the apparel, high production cost of apparel. Existing scholarly works suggest that supply chain coordination through supply contracts such as buyback contract, revenue sharing contract, etc. is useful to coordinate the supply chain. Recent studies indicate that devising specially designed contracts i.e. combining two contracts that share same structural properties can improve the supply chain performance. Motivated by these examples, we propose a specially designed buyback revenue sharing contract (BBRS) to coordinate a dyadic fashion apparel supply chain comprising one manufacturer and one retailer with the bringing appropriate adjustments in buyback contract and revenue sharing contract. Here, we discuss the issues such as optimal order quantity, coordinating criteria, and supply chain member’s profitability under buyback revenue sharing contract. We present a comparative study of buyback contract, revenue sharing contract, and buyback revenue sharing contract (BBRS) for both apparel manufacturer and retailer using an extensive numerical analysis. Also, we discuss the impact of various contract parameters on the supply chain performance.