Revenue-sharing Contract Research Articles

Collaborative Decision-Making Mechanism of Air Material Supply Based on Revenue-Sharing Contract

Due to the complex nature of air material demand and supply process, inventory pooling among a number of airlines is an intuitive way of exploiting the scale economies of availability services, and this paper analyzes the air material supply chain within sharing model and introduces revenue-sharing contract coordination mechanism into air material supply process. On the basis of analyzing stock-out compensation and inventory costs, it establishes the coordination model of air material supply chain whose demand quantity is in accordance with Poisson Distribution and Normal Distribution. The paper presents the collaborative decision-making algorithm for air material supply chain and verifies the coordination model by means of actually analyzing a numerical example for application. Based on a reasonable contract form and contract parameters, the optimization of production and ordering quantity and expected profit of each node on the air material supply chain can be achieved and hence the optimization of collaborative decision-making of air material supply and the performance of supply chain.

Coordinating a supply chain under demand and cost disruptions

In this paper, we investigate the coordination of a supply chain consisting of one manufacturer and n Bertrand competing retailers under disruptions of market demand and production cost. We present a coordination model of a supply chain under normal scenarios. Our findings demonstrate that the coordination scheme designed for the initial production plan should be revised when disruptions of market demand and production cost occur. To resolve this issue, we consider the possible deviation costs caused by disruptions and propose optimal decision models for different disruptions under centralised decision-making. We present an improved revenue-sharing contract model to coordinate the decentralised supply chain under disruptions. The proposed models are then further analysed through numerical examples.

Capital Structure, Product Market Dynamics, and the Boundaries of the Firm

We model a new product market opportunity as an option and ask whether it is best exploited by a large incumbent firm (integration) or by a small separate firm (nonintegration). Starting from a standard framework, in which value-maximizing investment and financing decisions are jointly determined, we show that integration protects assets in place value, whereas nonintegration protects option value and maximizes financial flexibility. We show that increases in standard measures of cash flow risk predict exploitation of new opportunities by specialized firms, whereas increases in product market competition (e.g., the risk of competitive preemption) predict exploitation by incumbents. We also show that alliances organized as licensing agreements or revenue-sharing contracts sometimes better balance the sources of value and thus may dominate more traditional forms of organization. These organizational equilibria arise from the dynamic interaction of the new opportunity’s option-like features with realistic competitive forces. This paper was accepted by Brad Barber, finance.

Revenue Sharing Contract of Green Supply Chain under Manufacturer Risk-Aversion

Background on two stages green supply chain consisting of a manufacturer and a retailer, considering the degree of risk aversion and product greenness, consumer preferences and other factors, the centralized decision-making game model and manufacturer-leading Stackelberg game model are established.Then two game models are compared. The interaction of product greenness, wholesale price, product price,and risk aversion utility for manufacturers and retailers are also disscussed. Finally, the revenue sharing contract is applied to coordinate the green supply chain . The results show that:(1) In the centralized decision-making model, there is a critical value of the product green degree; (2)In manufacturer-leading Stackelberg game model, the higher the green degree of the product, the higher the manufacturer's wholesale price,and the wholesale price increases as risk aversion degree of manufacturers improves;(3)The revenue sharing contract can coordinate this type of green supply chain under manufacturers risk-averse.

Quick response and supply chain structure with strategic consumers

This work explores the impact of quick response on supply chain performance for various supply chain structures with strategic customer behavior. By investigating pricing and inventory decisions in decentralized supply chains under revenue-sharing contracts and in centralized supply chains, we study the performance of four various systems and compare the value of quick response in different supply chain structures. The results show that if the extra cost of quick response is relatively low, the value of quick response would be greater in centralized systems than in decentralized systems. On the other hand, if the extra cost is high, decentralized supply chains reap more incremental profits from adopting quick response. We also find that revenue-sharing contracts enable a decentralized supply chain to outperform a centralized supply chain, but only allow limited flexibility of allocating total profits between a manufacturer and a retailer.

Supply Chain Coordination through a Revenue-Sharing Contract with Two Kinds of Fuzzy Demand

This paper studies a supply chain coordinated by a revenue-sharing contract in fuzzy environment. Two kinds of fuzzy programming models are discussed: revenue-sharing contract with fuzzy linear demand model and fuzzy iso-price-elastic demand model. Supply chain coordination in both centralized decision setting and centralized decision setting are achieved by obtaining the optimal solutions in the discussed settings.

Revenue Sharing Contract Model Based on CVaR Rules: Research on Contract Phone Card

Contract phone card is a kind of special product with follow-up service. For this particular product, we designed a revenue sharing contract for communication operator, based on a research of product pricing and ordering problem about communication operator and its sales agent. The contract will encourage the sales agent to improve the quantity of cards and achieve the purpose of increasing the number of users, by sharing a certain proportion of fixed subsequent earnings to the sales agent. Then, we used CVaR risk measurement tools to study pricing and ordering problem of sales agent in the revenue sharing contract. The results show that appropriate sharing factor could achieve the optimal coordination between communication operator and its tier-one agent, and maximize the benefit of the supply chain.

A Multi-Retailer Decentralized Supply Chain Coordination Based on Revenue-Sharing Contracts

To a decentralized supply chain system consisting of a manufacturer and multiple independent retailers, the game models about the decentralized solution and centralized solution are developed. Comparison of the optimal solutions to two models reveals that the supply chain needs coordination. Then a coordination model on the revenue-sharing contracts is introduced. Finally, a numerical example shows that the perfect supply chain coordination and the flexible allocation of the profit can be achieved when a complementary profit-sharing agreement is included.

Sustainable development of the fresh agricultural products supply chain through the application of RFID technology

This study discusses the sustainable development of a fresh agricultural product (FAP) supply chain, which consists of one manufacturer and one retailer, from the perspective of supply chain coordination. The study includes a centralized FAP supply chain, a decentralized FAP supply chain, and a decentralized FAP supply chain under a "revenue-sharing" contract. The study also establishes the profit models of the three FAP supply chains before and after investment in the radio-frequency identification (RFID) technique. Afterwards, the models are compared and the critical values of the cost of the RFID tags are calculated. Finally, the sustainable development of the FAP supply chain is obtained. The revenue-sharing contract facilitates the coordination of the FAP supply chain. In addition, RFID technology application can reduce the loss rate of FAP transportation as well as increase the production cost of FAP and the utilization rate of RFID tag recycling. Furthermore, the RFID technology application itself can be simplified in the future. The more significant these three changes are, the greater the willingness of companies in the FAP supply chain to invest in RFID.

Tourism Supply Chain Coordination through Revenue Sharing Contract

In this paper we develop revenue sharing contracts in a scenic spot –travel agency tourism supply chain. We use the Stackelberg game model to formulate the leader–follower relationship. By backward induction, we obtain equilibrium under the non-cooperative revenue sharing contract and the cooperative revenue sharing contract. Results show that the non-cooperative revenue sharing contract doesn’t meet the travel agency’s participation constraint while the cooperative revenue sharing contract can achieve coordination and Pareto improvement. Finally the Nash bargaining game suggests that scenic spot obtains a larger share of the profit growth due to its higher bargaining power.

Which business model for e-book pricing?

We characterize and compare equilibrium pricing strategies in a marketing channel in two scenarios. In the first scenario, the manufacturer chooses the wholesale prices of the two versions of a product, i.e., tangible and digital. and the retailer their prices to consumer. In the second scenario, the players use a revenue-sharing contract for only the digital version, while the competing version is managed by a wholesale price contract. The problem is inspired from a pricing controversy in the e-book industry.

Decision and coordination in a competing retail channel involving a third-party logistics provider

This paper investigates decision and coordination in a supply-chain-wide system consisting of a manufacturer, a third-party logistics (3PL) provider, and two competing retailers. The product distribution functions may be implemented by the 3PL provider or the two retailers who face a decision problem that whether the 3PL provider should be introduced. The advantage of introducing the 3PL provider lies in his/her lower logistics cost. The drawback lies in the 3PL provider’s profit margin which leads to classic double marginalization. A new insight provided by this paper is that whether or not introducing the 3PL provider depends on the balance of these two effects. This paper reveals the conditions of the balance and explores the effect of retail competition on this balance. Furthermore, we discuss the dominant retailer model where one retailer is a price leader, and the other is a price follower. Whether the 3PL provider should be introduced under the dominant retailer model is also analyzed. Finally, three contracts: a spanning revenue-sharing contract, a quantity discount contract and a two-part tariffs contract are devised to effectively coordinate the decentralized system involving the 3PL provider.

Is Revenue Sharing Right for Your Supply Chain?

Many firms have enjoyed remarkable success using revenue-sharing contracts to improve supply chain performance. The video rental industry and its pioneering deal with movie studios is one such example. At the same time, other firms have struggled to make it work. What accounts for this difference? When can revenue sharing create significant value and what are the implementation costs? By comparing and contrasting several case examples, this article develops a general framework that helps answer these questions, which is based on the fundamental sources of added value and added costs.

Supply Chain Coordination Based on Revenue Sharing Contract in B2B eMarkets with Trade Credit Financing

Supply Chain Coordination Based on Revenue Sharing Contract in B2B eMarkets with Trade Credit Financing

English

This study constructs a two-period supply chain model consisting of two suppliers and one retailer using a revenue-sharing contract. Considering random investment cost, the impact of supplier competition on innovation strategy is analyzed and the equilibrium strategy of suppliers’ technology innovation game as well as the optimal revenue-sharing contract is derived. It is found that technology innovation degree influences supplier competition, technology innovation strategy and the form of the optimal revenue-sharing contract. Supplier innovation can improve retailer’s profit, but it may reduce supplier’s profit as well as the supply chain efficiency due to the uncertainty of investment cost and supplier competition. Key words: Technology innovation, revenue-sharing contract, supply chain efficiency, game analysis.

Coordination of a socially responsible supply chain using revenue sharing contract

This paper explores coordination of a corporate social responsible (CSR) manufacturer–retailer chain by considering two cases, CSR retailer and CSR manufacturer. In manufacturer-Stackelberg game setting revenue sharing (RS) contract is used to coordinate the channel. It is found that CSR retailer’s perfect welfare maximizing motive resolves channel conflict, otherwise RS contract coordinates the channel. Wholesale price of RS contract is higher than marginal production cost above a threshold of CSR in one case and is negative above a threshold of CSR in the other. Also, CSR manufacturer’s pure profit is negative above a threshold of CSR.

Revenue-sharing contracts across an extended supply chain

Revenue-sharing contracts have been heavily researched and promoted in the academic literature. However, despite some well-documented examples (e.g., the way Blockbuster and film studios were able to increase availability of the latest video releases in rental shops through a revenue-sharing contract), they seem to be much less prevalent in practice. A possible reason for this gap between theory and practice is that most academic research has focused on two-party contracts involving only one buyer and one supplier, while in reality, most supply chains consist of multiple stages. When there are several stages in the chain—as is the case for many extended, global supply chains—the traditional revenue-sharing contract is no longer optimal for the two contracting parties, as every other participant in the chain is able to leverage the revenue-sharing contract to its own advantage. Put another way, a revenue-sharing contract between only two parties is not incentive-compatible across all participants. Accordingly, we suggest that a revenue-sharing contract should involve all the supply chain partners, and propose a spanning revenue-sharing contract that accomplishes coordination and incentive-compatibility across the same.

Coordinating a closed-loop supply chain using a bargaining power approach

Coordinating a vertically separated channel by means of contracting mechanisms has been extensively researched. This study investigates the performance of two commonly used contracting mechanisms: the wholesale price contract and the revenue-sharing contract in coordinating a closed-loop supply chain that consists of two competing channels in the market: a manufacturing and a remanufacturing supply chain. This study formulates the problem as multi-variable optimisation models under centralised, non-cooperative decentralised, and cooperative decentralised regimes using a bargaining power theory. We carried out equilibrium analyses and in-depth numerical studies. Results show that the two contracts are mathematically equivalent under cooperative contracting schemes. The proposed mechanisms coordinate the dual competing channels, improve supply chain efficiency, and achieve Pareto improvements among channel participants. Especially when the two competing products are highly substitutable in the market, the system-wide profit increment is significant by applying the contracting schemes in the decentralised setting.

Optimal revenue-sharing contract based on forecasting effort for uncertain agency problem

This paper discusses an optimal contracting problem between a principal and an agent by establishing an uncertain agency model. Compared with the existing work, this research focuses on the risk cost caused by the wrong investment in a task based on an inaccurate assessment about the potential output. To avoid it, the principal authorizes the professional agent to make a more accurate assessment about the output in the light of his professional knowledge and experience, and then to show the principal the optimal amount invested in the task. Meanwhile, as an incentive for the agent to pay great forecasting effort to make the more accurate assessment about the output, the principal provides the agent with a revenue-sharing contract including a sharing ratio for him. On this view, this paper proposes the optimal revenue-sharing contract that provides guidance for the two participators to make their respective optimal decisions. Furthermore, the proposed work is supported with the numerical results by analyzing the evolutions of the optimal contract under various influencing factors.

Endogenous residual claimancy by vertical hierarchies

In this note we study a model of vertical hierarchies where the allocation of residual claimancy is endogenous and is determined jointly with production and contractual decisions. We show that the (equilibrium) allocation of residual claimancy may be affected by production externalities across hierarchies in a non-trivial manner. Specifically, although revenue-sharing contracts foster agents’ (non-contractible) surplus enhancing effort, we show that principals dealing with exclusive and privately informed agents might still prefer to retain a share of the surplus from production when dealing with inefficient (high-cost) types. This is because reducing the surplus share of those types reduces the information rent given up to efficient (low-cost) types by means of a ‘generalized competing contracts’ effect.