Abstract
In this article, we study a two-echelon supply chain with a single manufacturer and a single retailer. In the case of advertising investment affecting the market demand, we use the theory of game theory, and respectively discuss the coordination of general revenue sharing contract and revenue sharing-advertising cost sharing contract. The results show that: the general revenue sharing contract cannot achieve supply chain coordination. However, revenue sharing-advertising cost sharing contract in a specific form can achieve supply chain coordination. And in the appropriate revenue sharing contract parameters, it can also achieve a win-win situation between the two sides.
Highlights
The revenue sharing contract, which coordinates the cooperation among supply chain members, has become one of the important directions of supply chain management research
In the case of advertising investment affecting the market demand, we use the theory of game theory, and respectively discuss the coordination of general revenue sharing contract and revenue sharingadvertising cost sharing contract
The results show that: the general revenue sharing contract cannot achieve supply chain coordination
Summary
The revenue sharing contract, which coordinates the cooperation among supply chain members, has become one of the important directions of supply chain management research. Cachon (2001) first studied the revenue sharing contract using mathematical modeling, and thought that revenue sharing contract was an improvement to the wholesale price contract, and it could coordinate the supply chain more effectively [2]. More and more researches about the revenue sharing contract have proved that the revenue sharing contract can realize coordination of supply chain [3]-[8]. Most of these researches don’t consider the simultaneous influence of retailers’ advertising and price on demand. The paper considers the case of the retailer’s advertising investment, establishes an effective revenue sharing contract, realizes the supply chain coordination, and makes optimal advertising cost and optimal price.
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