Abstract
Considering the market demand is stochastic and dependent on price, this paper shows that the revenue-sharing contract could coordinate a three-level supply chain consisting of one manufacturer, one distributor, and one retailer under normal environment. However, the original revenue-sharing contract cannot coordinate the supply chain under disruptions in circumstances of certain incidents leading to significant changes in market demand and causing additional deviation costs. To solve the problem, this essay introduces two improved forms of revenue-sharing contract: a mixed contract form based on a quantity discount policy and a pure form, which are characterized by antidisruption ability. The model of improved revenue-sharing contract is optimized when the market demand is in the additive form or in the multiplicative form with price 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.
Highlights
In recent years, some serious incidents attract attention from all over the world, such as “SARS” in China in 2003, the southern China snow disaster in 2008, the earthquake in Japan in 2011, and the bird flu of H7N9 in 2013
This paper studies how to use revenue-sharing contract [27, 28] to coordinate a three-level supply chain under disruptions with price dependent demand
Compared with the existing literature on disruption management for supply chain coordination, this paper throws new light in the following three aspects. It studies the coordination of three-level supply chain under disruptions with price dependent demand
Summary
Some serious incidents attract attention from all over the world, such as “SARS” in China in 2003, the southern China snow disaster in 2008, the earthquake in Japan in 2011, and the bird flu of H7N9 in 2013. This paper studies how to use revenue-sharing contract [27, 28] to coordinate a three-level supply chain under disruptions with price dependent demand. Compared with the existing literature on disruption management for supply chain coordination, this paper throws new light in the following three aspects First of all, it studies the coordination of three-level supply chain under disruptions with price dependent demand. It studies the coordination of three-level supply chain under disruptions with price dependent demand It puts forward the revenue-sharing contract based on quantity discount policy put forward, and proposes the pure form of the revenue-sharing contract, which has not been discussed before.
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