Revenue-sharing Contract Research Articles

Optimal decisions in a capital-constrained supply chain under credit guarantee and revenue-sharing contracts

This study proposes a novel Supply Chain Finance scheme (CG-RS), integrating credit guarantees (CG), and revenue-sharing contracts (RS). We analyze a three-party Stackelberg game between a capital-constrained retailer, supplier, and bank. We derived equilibrium strategies under both monopolistic and competitive bank markets to investigate the impact of the CG-RS scheme on the financial performance of each party. From the numerical analysis, we find that all parties can benefit from the CG-RS scheme by mitigating default risk and aligning incentives. The supplier's guarantee coefficient and the retailer's initial capital significantly influence the scheme's outcomes, while the revenue-sharing proportion plays a crucial role in balancing interests. Our findings suggest that the CG-RS scheme offers a promising solution for addressing capital constraints and enhancing supply chain performance.

Closed-loop supply chain decision making and coordination considering channel power structure and information symmetry

China is currently undergoing a phase of high-quality development, with increasing emphasis on the circular economy, energy conservation, and environmental protection by both the government and enterprises. This paper examines a secondary supply chain comprising manufacturers and retailers, focusing on three supply chain decision-making models: one where the manufacturer is the channel leader, one where the retailer is the channel leader, and one where both parties have equal power. The study investigates the impact of manufacturers misrepresenting their Corporate Social Responsibility (CSR) information and the challenges associated with recycling efforts on the optimal performance of the supply chain. The findings reveal that when manufacturers lead the supply chain, they do not misrepresent their private information. However, when retailers dominate, manufacturers tend to underreport their CSR levels and the difficulty of recycling efforts. In scenarios where manufacturers and retailers have equal power, manufacturers do not misreport the difficulty of recycling but do underreport their CSR levels. This misreporting benefits the manufacturers at the expense of retailers and overall supply chain profitability, while also discouraging the recycling of used products. Across all three power structures, the study shows that retailers’ marketing efforts decrease as the misrepresentation of recycling difficulty increases, and increase as the misrepresentation of CSR levels increases. To mitigate the effects of manufacturers’ misreporting under information asymmetry, the paper proposes revenue-sharing contracts and two-part pricing contracts to coordinate the closed-loop supply chain under different power structures. Both contracts are shown to achieve Pareto improvements within the supply chain. This research provides valuable insights for enterprises operating within closed-loop supply chains, highlighting the importance of enhancing communication and cooperation to bridge information gaps and ensuring the coordina.

Existence of equilibrium in a dynamic supply chain game with vertical coordination, horizontal competition, and complementary goods

We consider supply chain competition and vertical coordination in a linear–quadratic differential game setting. In this setting, supply chains produce complementary goods and each of them includes a single manufacturer and a single retailer who coordinate their decisions through a revenue-sharing contract with a wholesale price and a fixed sales revenue share. We study a multiple leader-follower Stackelberg game where the manufacturers are the leaders and the retailers are the followers. Competition occurs at both levels of the supply chains. Retailers play Nash and compete in price; manufacturers also play Nash but they compete in choosing their production capacities by exploiting the equilibrium price decisions made by the retailers. We show that open-loop Nash equilibria exist when the manufacturers only receive a wholesale price (there are no longer exploiting the equilibrium price decision made by the retailers, however). When the manufacturers receive both a wholesale-price and a share of the retailers’ sales revenues, equilibria generally no longer exist. The non-existence of an equilibrium stems from the fact that the manufacturers’ instant profits are discontinuous functions of their production capacities. This discontinuity leads to a major technical difficulty in that one cannot apply standard optimal control approaches to study the equilibria of the dynamic game. Our results illustrate the possibility that competition between supply chains might not be sustainable when they sell complementary products and rely on a revenue-sharing agreement.

Dynamic game research of food agricultural products supply chain based on blockchain traceability technology

PurposeFood quality and safety issues have always been imperative topics discussed by people. The anti-tampering of blockchain technology and the transparency of information make it possible to improve food traceability and safety quality. How to effectively apply blockchain traceability technology to food safety has great research significance for improving food safety and consumer quality trust.Design/methodology/approachThe paper aims to analyze the differences in product quality levels and market participants’ profits before and after the use of blockchain-driven traceability technology in the food agricultural product supply chain (SC) in the dynamic game frameworks of supplier-led and retailer-led modes, respectively, and explores the willingness, social welfare and consumer surplus of each member of the agricultural product SC to participate in the blockchain. Besides, We investigate the SC performance improvement with the mechanism of central centralized decision-making and revenue-sharing contract, compared to the SC performance in dynamic games.FindingsThe results are obtained as follow: The adoption of blockchain traceability technology can help improve the quality of food agricultural products, consumer surplus and social welfare, but the application and popularization of technology is hindered by traceability technology installment costs. Compared with the supplier leadership model, retailer-led food quality level, customer surplus and social welfare are higher.Research limitations/implicationsHow to effectively apply blockchain traceability technology to food safety has great research significance for improving food safety and consumer quality trust.Practical implicationsFood quality and safety issues have always been hot topics discussed by people. The anti-tampering of blockchain technology and the transparency of information make it possible to improve food traceability and safety quality.Social implicationsThe research results enrich the theories related to food safety and quality, and provide a valuable reference for food enterprises involved in the decision-making exploration of blockchain technology.Originality/valueBased on the characteristics of blockchain technology, the demand function is adjusted and the product loss risk of channel members is transferred through a Stackelberg game SC composed of agricultural products suppliers and retailers.Highlights:•We introduce two features of blockchain: quality trust and product information tracking.•The willingness of each member of the supply chain to use blockchain for product traceability was explored.•The overall traceability effect of the retailer-led blockchain is better than that of the manufacturer-led blockchain.•The cost of blockchain technology is a barrier to its adoption.•Blockchain brings higher consumer surplus and social welfare.

Coordination of a socially responsible two-stage supply chain under random yield and demand

This study integrates corporate social responsibility (CSR) and channel coordination in a supply chain (SC) under random yield and random demand. In the SC, a supplier with random yield determines wholesale price and production input, and a producer with CSR decides order quantity and CSR investment facing CSR-related random demand. For centralized SCs with and without CSR, we prove the unimodality of the expected profits of the SCs for generic random yield and demand, and show the uniqueness of optimal ratio of order quantity to production input quantity. We disclose that the optimal expected profit of the SC with CSR is larger than that of the SC without CSR, and the profit difference increases with CSR effort and expected yield. We also find that the optimal CSR investment increases with the expected yield. Subsequently, the Nash equilibrium solutions of decentralized SCs under wholesale price and revenue-sharing contracts are analyzed. Next, we present a revenue and CSR sharing contract to realize channel coordination and win-win of SC members and related stakeholders. Lastly, we verify theoretical statements of centralized and decentralized SCs versus three numerical examples, and present managerial insights for the effect of yield uncertainty and CSR effort.

Pricing policies for a competitive dual-channel supply chain with green investment and sales effort under revenue-sharing contract

In view of the mushroom development of web-based business and green production, a few organizations have moved to produce ecological friendly items and utilized the online channel to build up the competition. This paper deals with a two-echelon sustainable dual-channel supply chain containing two manufacturers and a single retailer. One manufacturer of the investigated supply chain produces a traditional non-green item, and another one releases a substitutable green item. The demand of both the item at the online and offline channel is a function of the sales price, greenness level, sales effort of the retailer. Furthermore, we have discussed the criteria for optimal pricing and greening strategy of supply chain members and the sales effort level of the retailer under a centralized and decentralized model. To enhance the supply chain performance, a revenue-sharing contract has been proposed, subject to the pareto improvement of each channel member. The numerical result demonstrates that the proposed revenue-sharing contract can enhance the manufacturer’s profit as well as system profit compared to the centralized and decentralized model and ensure higher profit for all the members than the decentralized model. Moreover, the item in the centralized model enjoys the highest green level than all other scenarios. Sensitivity analysis exhibits that a higher value of greening cost reduces the manufacturer’s green level, decreasing the sales price.

Financing a push and pull supply chain under revenue sharing: value addition and default risk transmission mechanism

Supply chain finance (SCF) releases participants' capital constraints and facilitates their operations. SCF and transactional contracts can have synchronised effects on participants' performance. This research analyses how credit financing and bank loans with revenue-sharing contracts can help capital-constrained suppliers and retailers improve their financial and risk management performance in the push and pull supply chains. Results suggest that SCF generates greater profits than capital-constrained supply chains without SCF and well-capitalised supply chains, demonstrating a leverage effect. In a push scenario, SCF enhances the wholesale price effect and risk-sharing effect of the revenue-sharing contract, resulting in increased order quantity and profits for participants, albeit with an amplified default risk transmission effect. Conversely, in a pull scenario, SCF boosts participant profitability by strengthening the order quantity effect of the wholesale price contract, although its risk-sharing effect is weakened by the revenue-sharing contract, thereby mitigating the default risk transmission effect. When the revenue-sharing rate is low, the push model performs better in terms of profit enhancement but exhibits higher default risk transmission levels compared to the pull model, and vice versa. The findings guide participants in leveraging SCF and revenue-sharing contracts to enhance their benefits and control the default risk transmission level.

Protecting labor rights: Contract design and coordination between brand firms and suppliers

This paper explores the design of a contract aimed at coordinating brand firms and their suppliers to collectively protect the suppliers’ labor rights. It finds that a unilateral cost-sharing contract can incentivize suppliers to protect labor rights, while improving the profits of both brand firms and their suppliers. However, such a contract fails to coordinate the supply chain because of an insufficient incentive for both involved parties. Two improved contracts of this contract can coordinate brands firms and their suppliers to improve their efforts to protect labor rights under certain conditions while failing to achieve coordination. Accordingly, this research proposes a bilateral cost- and revenue-sharing contract. The results indicate that with an appropriate revenue-sharing proportion, this contract effectively encourages brand firms and their suppliers to participate in protecting labor rights and coordinate the supply chain. In addition, an increase in the proportion of prosocial consumers incentivizes brand firms and their suppliers to improve labor rights. Nonetheless, consumers’ excessive reliance on brand goodwill to evaluate the total supply chain efforts to protect labor rights will reduce their efforts. Finally, as the impact of labor rights protection efforts on reference prices increases, it can stimulate brand companies and suppliers to increase investment in improving labor rights. At this high impact level, the reference price in the centralized model may surpass that in the unilateral cost-sharing contract. However, if supply chain members invest little effort to protect labor rights, the increase in this impact could reduce consumers’ reference price.

Pricing strategies for shared manufacturing platform considering cooperative advertising based on differential game.

Shared manufacturing is a new business form that focuses on all aspects of production and manufacturing, mainly relying on the shared manufacturing platform to achieve the optimal allocation of idle resources. For enterprises, in the process of deciding to lease idle resources, the pricing and advertising investment efficiency of the shared manufacturing platform is a valuable research issue. The shared manufacturing model in this paper consists of one manufacturer and one shared manufacturing platform, which will invest in cooperative advertising while the shared manufacturing process is completed. The cooperative advertising involves four models: the traditional cooperation model, the cost-sharing contract model, the revenue-sharing contract model, and the bilateral cost-sharing contract model. We investigate the impact of some key parameters on the prices and profits of the manufacturer and the shared manufacturing platform based on the differential game. The numerical examples demonstrate the viability of the model. Finally, we provide suggestions based on the decision-making of the manufacturer and the shared manufacturing platform under different cooperative advertising models.

Quality and Pricing Decisions in a Dual-Channel Closed-Loop Supply Chain Considering Imperfect Product Recycling

Level of quality not only affects demand but also affects the proportion of imperfect products and then affects profit. This paper takes the quality level as a decision variable, considers both the consumer demand and the recovery of imperfect products in a dual-channel closed-loop supply chain (CLSC), and studies the significance of a revenue-sharing contract for coordination. The results show that the relationship between the optimal price and the quality level is affected by the repair cost of imperfect products and that the consumer’s attention to price and quality affects the trend of the overall profit with the quality level. In some cases, simply improving the quality level cannot expand the demand and is not even conducive to the improvement of green supply chain profits. It is also found that in both centralized and decentralized scenarios, coordination contracts can effectively motivate retailers to collect waste and help improve the economic efficiency of green supply chains.

Battery recycling models selection and contractual incentives: From an information sharing perspective

As the battery recycling market in China is still in an embroynic stage, the mechanisms, channels, pricing, and efficiency of battery recycling are shrouded in opacity. Battery recycling in China is currently dominated by electric vehicle manufacturer, supplemented by other market players such as battery producers and electric vehicle retailers. Due to the lack of information, battery recycling lacks cooperation and communication, and the whole market is dealing with "Information Island." Therefore, based on information sharing and channel competition, this paper designs a Stackelberg game model with an electric vehicle manufacturer, an electric vehicle retailer, and a third-party recycler as the primary participants. This study found that effective information sharing can reduce intensified market competition and promote the transformation of market players into “collaboration state”. To promote partnership in the battery recycling market, this paper proposes a revenue-sharing contract incentive for the electric vehicle retailer to share demand information about battery recycling. It finds a revenue-sharing contract based on information sharing can help companies and competitors make appropriate behavioral choices in the battery recycling market. This study demonstrates that information sharing benefits the electric vehicle manufacturer and the third-party recycler while offering no advantages to the electric vehicle retailer. The decreasing accuracy of demand signals results in the diminishing value of information sharing for the electric vehicle manufacturer and the third-party recycler. The revenue-sharing contract can incentivize the electric vehicle retailer to share information.

Revenue sharing contract in competitive supply chain network coordination: location based on VMI policy and bullwhip effect

Online shopping advances have made the timely delivery of goods to the place of the buyer a necessity. This study considers a significant and rival supplier with a retailer network, and we use Stackelberg game to solve the problem. The major supplier (the leader) is connected to retailers and covers their orders through a Vendor Management Inventory policy and revenue-sharing contract. The major supplier pays fines in case of any shortage, and minimises the loss of retailers in the network through good warehouse locations. The rival supplier (the follower) signs contract with some retailers encouraging them to receive their orders to achieve higher utility. Hence, the expected utility function of both suppliers is calculated, and their strategies are measured at the equilibrium point in a zero-one model. Furthermore, a better view of major decisions by using bullwhip effect (BWE) analysis in the competition between main and rival suppliers is done. Results indicate a lower BWE when the actual order of the retailer equals the retailer's order from the supplier's perspective, and the demand variance ratio is less than the contracts’ profit variance ratio. Moreover, it is possible to control the demands variance ratio by controlling the ratio of contracts’ profit.

An analysis of performance, pricing, and coordination in a supply chain with cloud services: The impact of data security

As an important supporting technology for Industry 4.0 and smart manufacturing, cloud computing technology facilitated the sharing of digital services and reduced energy consumption. However, concerns about data security may cause firms to hesitate to adopt cloud services. How to coordinate their supply and demand and estimate the economic and environmental impacts are not well understood. To address this research gap, this study investigates a supply chain consisting of a cloud-service provider and a manufacturer and a collaboration mechanism that may coordinate both parties’ interests. We employ game theory to design stylized models of two supply chain structures (centralised and decentralised) and derive each firm’s optimal product pricing, profits, and the entire supply chain under different scenarios. The results show that considering cloud-service data security, a cloud-service supply chain cannot achieve coordination in the absence of intervention, while once coordinated it could be more environmentally friendly than the case without coordination. Furthermore, we propose a revenue-sharing contract to incentivise the cloud-service provider to cooperate with the manufacturer and identify the conditions for data security from which both can benefit. Interestingly, enhancing data security does not always help the entire supply chain, and higher data security may worsen it. Finally, numerical examples were derived to demonstrate our conclusions. Our study highlights supply chain coordination in a cloud-service environment and provides significant insights for participants who value data security and carbon–neutral innovation solutions.

Low carbon strategy and coordination for a two-echelon automotive supply chain considering dual credit policy

The dual-credit policy currently plays a crucial role in the automobile industry and significantly contributes to low-carbon operations in the automotive supply chain. This paper employs the game-theoretic approach to build a supply chain comprising a supplier (leader) and an automaker (follower), considers the impact of dual-credit policy, and incorporates vertical spillovers into the supply chain abatement. Both parties lower carbon emissions through vertical spillovers while maximizing profits, thereby studying the low-carbon strategy of the automobile supply chain. Our findings reveal that (1) increased vertical spillover rate reduces the prices of fuel vehicles (FVs) and new energy vehicles (NEVs), raises the low-carbon levels and profits of automakers and suppliers. (2) An increase in the NEV credit ratio under the centralized system raises both price and demand for NEVs, while the low-carbon levels of automotive enterprises are reduced. (3) The carbon emissions of each vehicle under the centralized system will be lower than those of the decentralized system, and the order of total carbon emission levels under both systems is closely related to the credit trading price and credits per NEV. Moreover, we explore the automotive supply chain coordination and find that the Nash bargaining model fully coordinates the supply chain, while the cost-sharing and revenue-sharing contracts do not. Also, numerical analysis shows that the optimal system profit under revenue-sharing is greater than cost-sharing.

Green technological licensing strategies with fixed-fee among rival firms under emissions trading scheme

This paper considers no-licensing, unilateral licensing, and cross-licensing strategies among rival firms with different green technologies under emissions trading scheme. We mainly focus on the impact of green technological licensing strategies on firms’ operational management from a business perspective by considering different carbon quota allocations. It is shown that the green technological licensing strategy is always a preferred strategy in globally optimal sense when the technological gap and emission improvement are lower than some thresholds; if firms’ bargaining powers are within a certain range, the green technological licensing strategies can realize a Pareto improvement; the equilibrium decisions have a certain degree of robustness under random perturbation. To improve the performance of green technological licensing models, we introduce revenue-sharing contracts into the green technological licensing negotiation processes and show that, if the better-off firms agree to transfer a certain portion of their revenues, revenue-sharing contracts can increase the total profits of firms and are profitable for all parties. From an economic and environmental perspective, green technological licensing strategies can promote sustainable social development, while revenue-sharing contracts can significantly increase the incentive for rival firms to license green technologies.

A Supply Chain Coordination Optimization Model with Revenue Sharing and Carbon Awareness

The present study explores the impact of carbon emissions on supply chain coordination, where the supply chain entities are a retailer and a distributor. The study also involves two types of systems, namely centralized and decentralized. A centralized system computes the profit of the entire supply chain, including the profit of a retailer and a distributor, using the traditional optimization technique. In contrast, a decentralized system computes the profit of both a retailer and a distributor independently and uses the Stackelberg sequence for profit optimization. According to the Stackelberg sequence, one entity is considered a leader and the other a follower. When the profit in both systems is compared, it is found to be higher in the centralized system. So, to coordinate the system, a revenue-sharing contract is applied to coordinate the supply chain under a stock–time–price-sensitive demand rate. Finally, a carbon emission cost is implemented to the profits of both systems to make the model more sustainable. The main objective of the research is to optimize the profit of the supply chain by considering the concept of revenue-sharing contracts and making the system more sustainable through the implementation of carbon emission cost. The overall study concludes that the revenue-sharing fraction ‘δ’ helps in coordinating the system and 0.4 is the value of the revenue-sharing fraction ‘δ’ that perfectly coordinates the system. Due to this coordination, both the parties will gain profit, i.e., retailer and distributor, and this whole phenomenon increases the profit of the supply chain. A sensitivity analysis is also performed to check the stability of the model, and the model is found to be quite stable. A numerical example is illustrated, providing the result of the model.

The Implications of the Spillover Effect Related to Green Co-Creation in a Supply Chain

Driven by environmental concerns, firms close to end-users are increasingly co-creating with customers for green product development within their supply chains. However, a challenge called “spillover” can hinder the incentive for green co-creation by these firms. This paper examines the spillover issue in a dual-channel structure, where downstream firms implement co-creation with customers for green product development. Our findings indicate that spillover from green investments can negatively impact the investing firm’s profits. However, in low-competition scenarios, spillover benefits the supplier and customers within the supply chain. Additionally, under specific circumstances, it can improve overall supply chain performance. Crucially, to safeguard the sustainability of green co-creation in supply chains and prevent detrimental co-destruction, we propose implementing revenue-sharing contracts that can generate Pareto improvements, benefiting all green supply chain members. As a result, unlike traditional intellectual property protection, which hinders spillover, this study offers an alternative strategy that is also somewhat complementary, promoting collaboration over restrictions to leverage the positive aspects of spillover.

Buyer-Backed Purchase Order and Advance Payment Discount Financing Under Carbon Trade Revenue-Sharing Contract

The promotion of low-carbon production is a crucial aspect of sustainable development, and carbon trading has proven to be an effective means of achieving this goal. However, the limited capital hinders small and medium-sized enterprises (SMEs) from achieving low-carbon production. Thus, this paper examines a low-carbon supply chain comprising a financially constrained manufacturer and a well-funded retailer. We propose a game-theoretical model that addresses the financial constraints of the manufacturer through buyer-backed purchase order financing (BPOF) or advance payment discount (APD) with carbon trading revenue-sharing contracts. We investigate the determination of pricing and carbon emission reduction strategies by firms utilizing diverse financing models. We find that the total amount of carbon emission reduction increases with the manufacturer’s carbon trade revenue-sharing ratio. The financing rate of BPOF has a negative impact on the amount of carbon emission reduction, while the discount rate of APD will not affect either the carbon emission reduction or the revenue of the supply chain. Among the two financing strategies, APD is optimal for maximizing profit and promoting low-carbon development throughout the supply chain.

An optimal “Trade-Online-Deliver-Offline” strategy for recycling unwanted medicines by reutilizing the existent informative pharmaceutical sales network

Circular economy and sustainable development resort to creating friendly and profitable environment of recycling unwanted goods in practice. This research aims to design a novel “Trade-Online-Deliver-Offline” (TODO) system to recycle unwanted medicines (UMs) by reutilizing the existent informative pharmaceutical sales network, which is the first dual-channel recycle system with synergies of manufacturer, chain drugstores and governments. Cross-selling effect, i.e., the additional sales from the customers who visit the drugstores for returning UMs, is also considered in this system. With a given revenue-sharing contract, a bi-level programming model is built to formulate such a recycle system, where the drugmaker is the leader and the chain drugstores are the followers within a decision mode of the Stackelberg game. Through reformulating, this complicated model is solved by developing an efficient smoothing algorithm. Scenario analysis and sensitivity analysis are employed to validate the built model and reveal valuable managerial insights. Main findings include: Compared with the existing modes, the proposed TODO mode is more efficient in terms of the recycled UM quantity and the reduced government burden; Cross-selling effects enhance the profit of drugstores without damage of customer’s surplus, but without significant impacts on the drugmaker’s profit; An increasing revenue-sharing ratio is beneficial to the drugstores in certain scenarios, but reduces the total profit of the recycle system; Resale prices of UMs and governmental tax relief policies both dominate the drugmaker’s optimal ratio of the resold and donated UMs.

Low-Carbon supply chain optimisation with carbon emission reduction level and warranty period: nash bargaining fairness concern

This study incorporates fairness concern in a low-carbon supply chain coordination mechanism where a single manufacturer sells its product to consumers through a single retailer. We develop four different scenarios of the Stackelberg master-slave game utility model—both members are neutral (NN), the manufacturer (FN) or retailer (NF) has fairness concern, and both are not neutral (FF), where the Nash bargaining fairness reference is leveraged to capture the impact of fairness preference on low-carbon supply chain optimisation decision-making profits, level of carbon emission reduction, warranty period, and revenue-sharing. Finally, numerical studies are conducted to quantify the impact of the Nash bargaining fairness concern. Research shows that: (1) fairness concern made it worse for the retailer but beneficial for the manufacturer and the system. (2) fairness concern causes a reduction in the level of carbon emission reduction and warranty period. However, the reduction of carbon emission reduction trading price and a certain range of revenue sharing effectively reduces the impact of fairness concern on members. (3) The revenue-sharing contract effectively reduces the negative impacts of fairness concern on supply chain members. The paper is a guide for enterprises development and cooperation but also provides empirical evidence for the government.