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Supply chain coordination and decision making under consignment contract with revenue sharing

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  • Li, Sijie
  • Zhu, Zhanbei
  • Huang, Lihua
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    Abstract

    Consignment contract with revenue sharing has been widely applied in many industries and is especially popular in on-line marketplaces. In this paper we consider a supply chain with an upstream manufacturer and a downstream retailer where a single-period product is produced and sold. The manufacturer chooses the delivery quantity and the retail price, and the retailer sets the revenue shares. Utilizing Nash bargaining model, a cooperative game model is developed to implement profit sharing between the manufacturer and the retailer to achieve their cooperation. When the manufacturer and the retailer are assumed to be risk-neutral, under a very mild restriction on the demand distribution, the decentralized supply chain can be perfectly coordinated and both the manufacturer and the retailer can earn more in cooperation. In this paper, we also analyze how the supply chain system parameters impact the optimal supply chain decisions and the supply chain performance.

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    Bibliographic Info

    Article provided by Elsevier in its journal International Journal of Production Economics.

    Volume (Year): 120 (2009)
    Issue (Month): 1 (July)
    Pages: 88-99

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    Handle: RePEc:eee:proeco:v:120:y:2009:i:1:p:88-99

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    Web page: http://www.elsevier.com/locate/ijpe

    Related research

    Keywords: Supply chain management Consignment contract with revenue sharing Coordination Cooperative game;

    References

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    1. Lau, Amy Hing Ling & Lau, Hon-Shiang, 2003. "Effects of a demand-curve's shape on the optimal solutions of a multi-echelon inventory/pricing model," European Journal of Operational Research, Elsevier, vol. 147(3), pages 530-548, June.
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    Cited by:
    1. Jiang, Li, 2012. "The implications of postponement on contract design and channel performance," European Journal of Operational Research, Elsevier, vol. 216(2), pages 356-366.
    2. Chen, Jing, 2011. "Returns with wholesale-price-discount contract in a newsvendor problem," International Journal of Production Economics, Elsevier, vol. 130(1), pages 104-111, March.
    3. Feng, Xuehao & Moon, Ilkyeong & Ryu, Kwangyeol, 2014. "Revenue-sharing contracts in an N-stage supply chain with reliability considerations," International Journal of Production Economics, Elsevier, vol. 147(PA), pages 20-29.
    4. Kumoi, Yuki & Matsubayashi, Nobuo, 2014. "Vertical integration with endogenous contract leadership: Stability and fair profit allocation," European Journal of Operational Research, Elsevier, vol. 238(1), pages 221-232.
    5. Hu, Wei & Li, Yongjian & Govindan, Kannan, 2014. "The impact of consumer returns policies on consignment contracts with inventory control," European Journal of Operational Research, Elsevier, vol. 233(2), pages 398-407.
    6. Yeung, Wing-Kwan & Choi, Tsan-Ming & Cheng, T.C.E., 2011. "Supply chain scheduling and coordination with dual delivery modes and inventory storage cost," International Journal of Production Economics, Elsevier, vol. 132(2), pages 223-229, August.

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