Impact of revenue-sharing contracts on improving profits for manufacturers and suppliers in the supply chain of organic textile products

Abstract

This article is concerned with designing a supply chain for organic textile products to improve, to increase and to ensure a fair distribution of profits for all participants in such a supply chain. To make such a supply chain as an integrated system, it was first important to ensure that the cotton products are produced organically, and then to suggest a supply chain in a 'win-win' strategy. The various contracts possible between the various members of the supply chain were presented and analysed mathematically using game theory. It was found that there were six possible contracts based on the scenarios of the game between the suppliers and the vendors. Further, it was possible to define the conditions which improve the profits in comparison with the case in which these contracts were not employed. This study is important because it promotes sustainability through encouraging the trade in organic cottons. Additionally, it helps in ensuring a fair distribution of the benefits and in improving profit shares for most members of the supply chain of organic cotton, in particular suppliers and manufacturers.