Revenue-sharing Contract Research Articles

Introducing a novel revenue-sharing contract in media supply chain management using data mining and multi-criteria decision-making methods

Despite all the advances in supply chain coordination, some businesses are still coordinated traditionally, including the media supply chain, in which the actor’s efficiency or deficiency is not considered in their wage determination. It means the success or failure of the project is nothing to do with the actor’s revenue. This article proposes a novel revenue-sharing coordination contract that benefits from text mining and the best–worst method to address this problem. We aim to determine a fair share of profit or loss of a movie for each of its actors based on their performance and efficiency on the success or failure of the project. One of the Iranian latest movies is considered as a case study, and its lead actor’s wage is determined under this contract. The sentiment analysis technique investigated the viewers’ opinions about the movie and the actor’s performance. Since the reviewers mainly are the people who have no expertise in cinematography, they cannot discern the influence of other participants on the actor’s performance. So the proposed method used experts’ opinions through the fuzzy DEMATEL method to consider the overlapping effect besides enhancing the validity of the reviewers’ opinions. The results of this paper assert that the actor’s performance will improve under the proposed method and therefore the movie will be more successful and profitable.

The Factors of Revenue-Sharing Contracts in Franchising: Evidence from the Korean Franchise Industry

I examine whether the existing theories on revenue-sharing contracts can explain variations in the terms of franchise contracts, including royalty rates, the degree of revenue-sharing, and the mix of franchising and company ownership (contract-mixing), in the Korean franchise industry. This study utilizes a unique dataset that I assembled on 300 franchise systems in the franchised restaurant industry in Korea. I find the capital constraint-based explanation is more consistent in explaining the franchise fee, whereas the moral hazard-based explanation is more consistent in explaining the royalty rate. Also, the contract length is found one of the most significant explanatory variables. These findings confirm the role of revenue-sharing as a tool to align the contracting parties' incentives and suggest it be a commitment device to a continued collaborative partnership between franchisors and franchisees.

Decision analysis of individual supplier in a vendor-managed inventory program with revenue-sharing contract

As a useful strategy to improve the flexibility of the system to manage uncertainty in supply and demand and to improve the sustainability of the supply chain, vendor-managed inventory (VMI) programs have attracted widespread attention in the field of supply chain management. However, a growing body of empirical literature has shown that participants’ decisions deviate significantly from the standard theoretical predictions. Under a VMI program, the supplier bears not only the production cost, but also the risk of leftover inventory. Moreover, the inequality among participants and different personalities of decision-makers in VMI programs may lead to the divergence of decision-making. To understand the supplier’s replenishment decision in view of the behavioral pattern, we propose a new inventory model for the supplier with the focus theory of choice. The proposed model conceives that the retailer evaluates each replenishment quantity based on the most salient demand for him/her instead of calculating the expected utility. By employing this inventory model, we construct a two-tier supply chain model with revenue-sharing contract and theoretically derive the optimal sharing percentage of the revenue and replenishment quantity. Results analysis gains managerial insights into the strategic selection of the retailer who faces suppliers with different personalities. Comparisons between the classic revenue-sharing contract model and the proposed model are also carried out by illustrative examples. This research provides a new perspective to analyze individual supplier’s behavior in a VMI program with revenue-sharing contracts.

Revenue Sharing Contracts and Coordination in the Mobile Service Supply Chain

Revenue Sharing Contracts and Coordination in the Mobile Service Supply Chain

Integration of Transportation Resources in Maritime Supply Chain Under Revenue Sharing Contract and Quantity Discount Contract

Integration of Transportation Resources in Maritime Supply Chain Under Revenue Sharing Contract and Quantity Discount Contract

Coordination in Supply Networks with Combined Topology

The paper considers the problem of supply chain coordination in supply networks using the revenue-sharing contract. The supply network has a combined topology and consists of three levels of participants: manufacturers, a distributor, and retailers. The authors consider the companies' performance improvement as the motivation of companies to operate in coordinating conditions. Simulation of contract conditions is implemented for different types of supply networks: from a simple case to a more complex one. The contract procedure is modeled as a game between two companies. The game solution is a set of contract parameters, providing Nash equilibrium, achieving the maximum of the supply network profit and Pareto-optimality of the obtained solution. The results show the application of revenue-sharing contracts in such networks has several peculiarities: the role of a coordinator in the supply network should be performed by a distributor; the distributor, by setting unified revenue shares for all retailers and manufacturers, gets a share of the expected profit of the supply network, each retailer gets a share of the supply network profit for its sales channel, and each manufacturer gets a share of the supply network profit for its product.

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

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

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

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.

Contracts Selection Under Quality Uncertainty in Refurbish Decisions

With the rapid development of the information technology industry, refurbished products play significant roles in this challenge of environmental, economic, and social performance revolution. Meanwhile, when the refurbished product is launched in the market compete with new products, how and whom to repair the used products effectively and what kind of effective coordinate incentive mechanisms utilized to alleviate conflict and achieve the challenge become one of the most significant issues. Therefore, this study compares two refurbishing structures (manufacturer refurbishing and retailer refurbishing) under three different contract incentive mechanisms (wholesale price, revenue sharing, and reward points contracts) in two periods closed-loop supply chain (CLSC) model with demand uncertainty. Our results show that the manufacturer should allow his retailer to refurbish used products under the condition of using reward points contract strategies. It will help improve the whole channel performance and create much higher profits. Meanwhile, all channel members benefit from the reward point contract in the manufacturer refurbishing scenarios. However, manufacturers prefer revenue-sharing contracts while retailers prefer wholesale price contracts in the retailer refurbishing scenarios.

CAPACITY SHARING STRATEGY WITH SUSTAINABLE REVENUE-SHARING CONTRACTS

This paper develops a duopoly model to analyse capacity sharing strategy and the optimal revenue-sharing contract under a two-part tariff and examines the effects of capacity sharing, cost, and sharing charges in three scenarios. The paper uses the two-part tariff method and adds a more realistic assumption of incremental marginal costs to improve the research on capacity sharing strategies. The results show that capacity constraints affect the sustainable development of firms. A sustainable revenue-sharing contract can create a win-win situation for both firms and promote capacity sharing. Capacity sharing, cost, and the revenue-sharing rate have different impacts in different scenarios; the optimal revenue-sharing rate and fixed fee can be determined to maximise the profits of firms that share capacity. However, capacity sharing may not improve social welfare.

Assessing the coordinated revenue-sharing contract of China’s farmer-supermarket direct-purchase model

China began connecting farmers directly with supermarkets 10 years ago, when they were at a disadvantage and forced to sell products at low prices, as unstable cooperation among supply chain participants led to inequitable distribution of revenue. Revenue-sharing contracts offer a risk-sharing approach to ensure supply chain coordination and optimize profit for all. Research on short life cycle products with revenue-sharing contracts assume stable prices or investigate the effects of revenue-sharing contracts on supply chain coordination. This study introduced a revenue-sharing contract model into a ‘farmer-supermarket direct-purchase’ supply chain, considering price fluctuation and retail promotional efforts, stochastic market demand, among other factors. Revenue-sharing contracts achieved long-term stability in supply chain coordination, all participants obtained more profits, and the size of revenue-sharing parameter depends on the position and bargaining power of all participants. A case study on Tianhong supermarket and Nanxia farmer cooperative verified these findings, eliciting practical implications for professionals and policymakers.

Accounting for consumers’ environmental concern in supply chain contracts

Consumers are increasingly concerned about pollution and are, at least in part, making their purchases accordingly. In this paper, we consider a supply chain where demand depends on the manufacturer’s environmental reputation, an asset that can only be built over time. We assume that this reputation depends on information emanating from the manufacturer itself about its environmental actions and on its objective environmental record when compared to an industry standard.In this paper, we look at the impact of consumers’ environmental concern on the strategies and outcomes of a supply chain. As the retailer has a direct influence on sales through its pricing policy, it seem more realistic to take a supply chain perspective instead of a single-firm one. Therefore, the contractual arrangement in the supply chain becomes a relevant issue. We model the supply chain as a two-player dynamic game and characterize and compare the equilibrium strategies and outcomes under wholesale-price and revenue-sharing contracts. We analyze the impact of the sharing parameter, the industry pollution standard and consumers’ degree of environmental sensitivity on the results, and in particular, on the region in the parameter space where a revenue-sharing contract is Pareto improving with respect to a wholesale-price contract. Also, we examine whether it is in the best interest of the retailer to behave myopically when setting its price.

Dual-Channel Supply Chain Coordination With BOPS and a Revenue-Sharing Contract

The omni-channel strategies buy-online-pickup-in-store (BOPS) is used to cater to customers who want a consistent service experience in different channels. In this paper, the author thinks of BOPS as an effective strategy for encouraging some online customers to switch to offline stores with high online return losses. The author first studies an omni-channel supply chain with centralized and decentralized decision making and explains why online returns hurt the supply chain with respect to the matching rate and the unit return loss. Although different channels can be operated by the same firm or different firms, the author studies how to coordinate the entire chain using a revenue-sharing contract. When online return losses are high, it is effective to adopt BOPS to reduce online return losses; otherwise there is no need to do so. Finally, the author presents numerical experiments, including a special case, and shows that in many cases, using an appropriate revenue-sharing contract under the proposed mechanism can increase the profits of the entire supply chain and its members.

Input Quantity Decision and Coordination Mechanism with Two Production Chances and Yield Uncertainty

Conducting a second production run can improve the company’s capability of meeting the market demand. Few works examine optimal input quantity decisions under the mode with two production chances considering demand and yield uncertainty. We propose a vendor-managed inventory (VMI) supply chain with one supplier and one retailer. The supplier has two production chances and faces yield uncertainty in each production run. It is necessary for the supplier to make trade-offs between the cost and benefit of the second production run, then decide whether to conduct the second production run. We investigate the supplier’s optimal input quantity decision in each production run and obtain the supply chain members’ expected profits. As a comparison, the mode with one production chance is also developed. We find that two production chances can help improve the performance of the supply chain under yield uncertainty. A revenue-sharing contract is introduced to coordinate the supply chain with two production chances, and efficient profit allocation is achieved through adjusting the revenue-sharing ratio and the wholesale price. An extension is conducted for a sensitivity analysis of unit punishment cost on the supplier’s input quantity decisions.

Pricing and Channel Coordination in Online-to-Offline Supply Chain Considering Corporate Environmental Responsibility and Lateral Inventory Transshipment

In this study, we investigate pricing policy and coordination conditions in an online-to-offline supply chain considering corporate environmental responsibility and lateral inventory transshipment. First, we provide demand functions to capture effects of price, corporate environmental responsibility level, and preference degree of the consumer to online channel. Then, we build profit functions and develop three joint pricing and corporate environmental responsibility-level decision models for centralized decision (Scenario CD), retailer Stackelberg game (Scenario RS), and manufacturer Stackelberg game (Scenario MS). Furthermore, we determine the optimal decision policies by solving developed models, and conduct sensitivity analysis of significant factors. Finally, we use a revenue-sharing contract to realize supply chain coordination and find coordination conditions for Scenario RS and MS, and further show the impacts of revenue-sharing rate and investment cost sensitivity on the conditions using numerical studies. We find that optimal joint decision policies can be affected by significant factors to a varying degree. In certain conditions, the revenue-sharing contract can coordinate online-to-offline supply chains considering corporate environmental responsibility and lateral inventory transshipment. Our study proposes a new decision problem, constructs new joint decision models, determines new optimal joint policies, conducts new coordination analysis, and thus contributes to the research on supply chain operations considering corporate environmental responsibility and lateral inventory transshipment.

Contract selection for fresh produce suppliers cooperating with a platform under a markdown-pricing policy

Since some platforms such as Amazon, and JD.com are expanding their business into the fresh produce market, traditional fresh produce suppliers are seeking to cooperate with them. However, markdown-pricing policies caused by the interaction between the time-varying quality of fresh produce and the time-varying price strongly influence the choice of the cooperation mode in current research. A wholesale price contract (WPC) and a consignment revenue-sharing contract (CRSC) are two common modes for cooperation between the fresh produce supplier and the platform. Accordingly, the markdown-pricing policies for fresh produce under these two contracts are analysed. The impacts of the deterioration rate and the price markdown time on profit and the pricing of the supplier and the platform are also discussed. Finally, the contracting strategy of the supplier and the contracting preference of the platform are examined. The results show that a CRSC is always beneficial for the supplier but not for the platform: if the price-sensitivity increase in the second period is small, then the platform is worse off under a CRSC when the price markdown time is moderate or the market size is small. However, the platform prefers a CRSC due to the high deterioration rate of fresh produce.

Pricing and Coordination Strategies of Dual Channels Considering Consumers’ Channel Preferences

With the rapid development of electronic commerce, consumers can freely buy the same product from a manufacturers’ Internet channel or a resellers’ physical channel. Based on the consumers’ channel preferences, this article classifies consumers into three types and investigates the price decision in a dual-channel supply chain using a Stackelberg game, which assumes that the manufacturer, as the game leader, first sets the wholesale price, then the reseller decides the retail price, according to the wholesale price. Furthermore, some numerical experiments are developed to investigate the impact of consumer acceptance, the degree of customer loyalty, and the proportion of identical shoppers on prices and profits. The results show that whether both the retail price and the wholesale price rise or fall depends on a combination of the cost of the physical channel and the Internet shopper’s acceptance of the Internet channel. The reseller’s profit is always lower than the manufacturer’s profit. The reseller’s profit is lower and the manufacturer’s profit is higher, compared with that of a traditional single channel supply chain. The numerical experiments showed that when an Internet shopper’s acceptance of an Internet channel is lower, the wholesale price and retail price in the dual channels will increase with an increase of the degree of customer loyalty (the proportion of identical shoppers). The reseller’s profit (the manufacturer’s profit) will reduce (rise) with the augmentation of the Internet shopper’s acceptance of an Internet channel. Finally, we design a revenue-sharing contract that can coordinate the supply chain and implement a win–win strategy for all partners. This work makes some contributions to the research area of coordination in dual-channel supply chains.

Sales mode selection of fresh food supply chain based on blockchain technology under different channel competition

In the era of new technology, e-commerce platforms (E-platform) have been opening up the fresh food market successively, so it is inevitable that they will face the problem of the selection of sales mode. We consider the blockchain-enabled traceability goodwill and product freshness, aiming to explore whether the E-platform chooses reselling or agency selling for fresh food in competition with different traditional retailers. Traditional retailers include both TR1 (the traditional retailer who collaborates with the supplier through a wholesale price contract) and TR2 (the traditional retailer who collaborates with the supplier through a revenue-sharing contract). Our results show, competition between traditional and online channels can lead to a higher price for fresh food and incentivize firms to invest more in product freshness and blockchain-enabled traceability goodwill, so it contributes to economical profits across the supply chain. Furthermore, in the presence of channel competition, the interaction between the E-platform sales mode and optimal strategies depends mainly on competition, the settable fee rate under agency selling and the wholesale price under reselling. Also, the rate increases can drive up the pricing and prompt the traditional retailer to expand investment in blockchain technology. However, it no longer affects the pricing when the rate equals the revenue-sharing proportion made by TR2. In addition, only when the wholesale price is higher than a certain threshold or the rate and competition meet certain conditions, double marginalization will make the pricing under reselling higher than that under agency selling. Combined with the numerical example, we further find that reselling is the dominant sales mode for fresh food with a low wholesale price regardless of the type of the traditional retailer. However, as the wholesale price rises, in addition to the wholesale price, the platform also needs to consider the impact of channel competition and the fee rate to choose the optimal sales mode, especially in a highly competitive environment.

Green supply chain management through call option contract and revenue-sharing contract to cope with demand uncertainty

Green supply chain management (GSCM) could be applied to enhance environmental and economic goals simultaneously; nevertheless, according to The University of Chicago Booth report, the overwhelming impacts of the COVID-19 epidemic have caused high fluctuations in market demand. Hence, green supply chain (SC) managers have faced challenges in the decision-making process. Motivated by this issue, we investigate a two-echelon SC network containing one retailer and two suppliers (a non-green supplier and a green supplier). The non-green supplier produces a customary product and has a limited production capacity. Inspired by Coors Brewery Company, the green supplier produces a recyclable product with sufficient production capacity; the retailer faces demand uncertainty and is responsible for bringing back the end-of-life products to the green supplier for the recycling process. In this study, besides decentralized and centralized decision scenarios, we survey two kinds of contracts, i.e., a call option contract and a revenue-sharing contract, which the green supplier offers as risk-sharing policies to motivate the retailer to increase its order quantity. We found that the two parties could agree to coordinate the channel by negotiating the optimal terms of the recommended contracts (i.e., call option contract terms: option price and exercise price, revenue-sharing contract term: wholesale price). Furthermore, our results show that both proposed contracts create a win–win situation for each member and heighten the profitability of the entire SC. By comparing the two contracts, we notice that the green supplier would like to offer the call option contract, and the retailer desires to accept the revenue-sharing contract in return.

Research on Financial Hedging Decision Based on Exchange Rate Risk in Transnational Supply Chain

This paper considers a three-echelon manufacturer-retailer-supplier supply chain, the purpose of which is to investigate the influence of the bilateral exchange rate risks of import and export and the leading company’s financial hedging on the decision-makers of the supply chain. Firstly, it constructs the profit function and the financial hedging decision-making model of each member in the decentralized supply chain. Secondly, it introduces the incentive mechanism of exchange rate risk hedging in the centralized supply chain. Thirdly, from the perspective of wholesale price agreements and revenue-sharing contracts, it discusses the impact of financial hedging behavior and bilateral exchange rate risks on the decision-making process of each member through mathematical modeling. Finally, it explores the relationships of decision variables through simulation analysis. The results illustrate that (i) for decentralized and centralized decision-making, the manufacturer’s expected profit and profit variance decrease with the increase of the fluctuations of import and export exchange rates under the hedging strategy for exchange rate risks; (ii) compared with the decentralized supply chain, the manufacturer’s expected profit in the centralized supply chain decreases slightly under the revenue-sharing contract; (iii) in the centralized supply chain, if the manufacturer’s risk hedging ratio is high, its profit variance is smaller than that of the decentralized supply chain and the expected profits of the retailer and the supplier will increase significantly; and (iv) for the members of the transnational supply chain, centralized decision-making is better than decentralized decision-making.