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Supply Chain Coordination Under Consignment Contract with Revenue Sharing

In: Supply Chain Coordination under Uncertainty

Author

Listed:
  • Sijie Li

    (Southeast University)

  • Jia Shu

    (Southeast University)

  • Lindu Zhao

    (Southeast University)

Abstract

The balance of power between manufacturers and retailers is shifting, and consignment contract with revenue sharing has been widely applied in many industries, especially in on-line marketplaces. In this chapter 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 players can earn more in the proposed cooperative setting. Furthermore, the impacts of supply chain system parameters on the optimal supply chain decisions and the supply chain performance are investigated in this chapter.

Suggested Citation

  • Sijie Li & Jia Shu & Lindu Zhao, 2011. "Supply Chain Coordination Under Consignment Contract with Revenue Sharing," International Handbooks on Information Systems, in: Tsan-Ming Choi & T.C. Edwin Cheng (ed.), Supply Chain Coordination under Uncertainty, pages 427-454, Springer.
    • Handle: RePEc:spr:ihichp:978-3-642-19257-9_17
    DOI: 10.1007/978-3-642-19257-9_17
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