IDEAS home Printed from https://ideas.repec.org/a/pal/jorapm/v19y2020i5d10.1057_s41272-019-00214-5.html
   My bibliography  Save this article

Model of stochastic spanning revenue-sharing contracts for multi-echelon supply chains

Author

Listed:
  • Ahmad Rusdiansyah

    (Institut Teknologi Sepuluh Nopember)

  • Rescha Dwi Astuti Putri

    (Institut Teknologi Sepuluh Nopember)

Abstract

We consider a stochastic demand problem under a fixed-price newsvendor setting. We investigate revenue-sharing contract models that could be implemented to coordinate all supply chain actors in a decentralized decision-making supply chain in order to act together coherently. We develop and compare two revenue-sharing contract models: a pairwise contract model between two players in each echelon and a spanning contract model that covers all echelons. In the last model, we assume that the most downstream entity initiates a single contract involving all upstream entities. Our numerical experiments show that in the decentralized condition, the most upstream entity will have the biggest percentage of revenue, while the most downstream one will receive the smallest. We also demonstrate that in these two types of contracts, all of the entities could have a bigger profit in the decentralized condition than that in the centralized one.

Suggested Citation

  • Ahmad Rusdiansyah & Rescha Dwi Astuti Putri, 2020. "Model of stochastic spanning revenue-sharing contracts for multi-echelon supply chains," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 19(5), pages 302-313, October.
    • Handle: RePEc:pal:jorapm:v:19:y:2020:i:5:d:10.1057_s41272-019-00214-5
    DOI: 10.1057/s41272-019-00214-5
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1057/s41272-019-00214-5
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1057/s41272-019-00214-5?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Gary D. Eppen & Ananth. V. Iyer, 1997. "Backup Agreements in Fashion Buying---The Value of Upstream Flexibility," Management Science, INFORMS, vol. 43(11), pages 1469-1484, November.
    2. Hau Lee & Seungjin Whang, 1999. "Decentralized Multi-Echelon Supply Chains: Incentives and Information," Management Science, INFORMS, vol. 45(5), pages 633-640, May.
    3. Giannoccaro, Ilaria & Pontrandolfo, Pierpaolo, 2004. "Supply chain coordination by revenue sharing contracts," International Journal of Production Economics, Elsevier, vol. 89(2), pages 131-139, May.
    4. Amiya K. Chakravarty & Jun Zhang, 2007. "Collaboration in contingent capacities with information asymmetry," Naval Research Logistics (NRL), John Wiley & Sons, vol. 54(4), pages 421-432, June.
    5. Harish Krishnan & Roman Kapuscinski & David A. Butz, 2004. "Coordinating Contracts for Decentralized Supply Chains with Retailer Promotional Effort," Management Science, INFORMS, vol. 50(1), pages 48-63, January.
    6. Y-Y Wang & H-S Lau & Z-S Hua, 2012. "Three revenue-sharing variants: their significant performance differences under system-parameter uncertainties," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 63(12), pages 1752-1764, December.
    7. Hamilton Emmons & Stephen M. Gilbert, 1998. "Note. The Role of Returns Policies in Pricing and Inventory Decisions for Catalogue Goods," Management Science, INFORMS, vol. 44(2), pages 276-283, February.
    8. Gérard P. Cachon & Fuqiang Zhang, 2006. "Procuring Fast Delivery: Sole Sourcing with Information Asymmetry," Management Science, INFORMS, vol. 52(6), pages 881-896, June.
    9. Holly Lutze & Özalp Özer, 2008. "Promised Lead-Time Contracts Under Asymmetric Information," Operations Research, INFORMS, vol. 56(4), pages 898-915, August.
    10. Andy A. Tsay, 1999. "The Quantity Flexibility Contract and Supplier-Customer Incentives," Management Science, INFORMS, vol. 45(10), pages 1339-1358, October.
    11. Gérard P. Cachon & Martin A. Lariviere, 2005. "Supply Chain Coordination with Revenue-Sharing Contracts: Strengths and Limitations," Management Science, INFORMS, vol. 51(1), pages 30-44, January.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Cai, Wenbo & Abdel-Malek, Layek & Hoseini, Babak & Rajaei Dehkordi, Sharareh, 2015. "Impact of flexible contracts on the performance of both retailer and supplier," International Journal of Production Economics, Elsevier, vol. 170(PB), pages 429-444.
    2. Bellantuono, Nicola & Giannoccaro, Ilaria & Pontrandolfo, Pierpaolo & Tang, Christopher S., 2009. "The implications of joint adoption of revenue sharing and advance booking discount programs," International Journal of Production Economics, Elsevier, vol. 121(2), pages 383-394, October.
    3. Zhou, Yong-Wu, 2009. "Two-echelon supply chain coordination through the unified number of annual orders," International Journal of Production Economics, Elsevier, vol. 117(1), pages 162-173, January.
    4. Giannoccaro, Ilaria & Pontrandolfo, Pierpaolo, 2009. "Negotiation of the revenue sharing contract: An agent-based systems approach," International Journal of Production Economics, Elsevier, vol. 122(2), pages 558-566, December.
    5. Leng, Mingming & Zhu, An, 2009. "Side-payment contracts in two-person nonzero-sum supply chain games: Review, discussion and applications," European Journal of Operational Research, Elsevier, vol. 196(2), pages 600-618, July.
    6. Linh, Cao To & Hong, Yushin, 2009. "Channel coordination through a revenue sharing contract in a two-period newsboy problem," European Journal of Operational Research, Elsevier, vol. 198(3), pages 822-829, November.
    7. Lin Jiang & Yong Wang & Xiaoming Yan & Wei Dai, 2014. "Coordinating a three-stage supply chain with competing manufacturers," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 22(1), pages 53-72, March.
    8. Zou, Xuxia & Pokharel, Shaligram & Piplani, Rajesh, 2008. "A two-period supply contract model for a decentralized assembly system," European Journal of Operational Research, Elsevier, vol. 187(1), pages 257-274, May.
    9. Roberta Pellegrino & Nicola Costantino & Danilo Tauro, 2020. "Advance Purchase Discounts for Supply Chain Finance System Coordination," Sustainability, MDPI, vol. 12(23), pages 1-20, December.
    10. van der Rhee, Bo & Schmidt, Glen & A. van der Veen, Jack A. & Venugopal, V., 2014. "Revenue-sharing contracts across an extended supply chain," Business Horizons, Elsevier, vol. 57(4), pages 473-482.
    11. Yong Zha & Kehong Chen & Xiaohang Yue & Yugang Yu & Samar Mukhopadhyay, 2019. "Trade credit contract in the presence of retailer investment opportunity," Naval Research Logistics (NRL), John Wiley & Sons, vol. 66(4), pages 283-296, June.
    12. B.C. Giri & S. Bardhan & T. Maiti, 2016. "Coordinating a three-layer supply chain with uncertain demand and random yield," International Journal of Production Research, Taylor & Francis Journals, vol. 54(8), pages 2499-2518, April.
    13. Huang, Kwei-Long & Kuo, Chia-Wei & Lu, Ming-Lun, 2014. "Wholesale price rebate vs. capacity expansion: The optimal strategy for seasonal products in a supply chain," European Journal of Operational Research, Elsevier, vol. 234(1), pages 77-85.
    14. Halati, Abolhassan & He, Yuanjie, 2010. "Analysis of supply chains with quantity based fixed incentives," European Journal of Operational Research, Elsevier, vol. 202(1), pages 214-222, April.
    15. Chen, Kebing & Xiao, Tiaojun, 2011. "Ordering policy and coordination of a supply chain with two-period demand uncertainty," European Journal of Operational Research, Elsevier, vol. 215(2), pages 347-357, December.
    16. Agrell, Per J. & Lundin, Johan & Norrman, Andreas, 2017. "Supply Chain Management: Horizontal carrier coordination through cooperative governance structures," International Journal of Production Economics, Elsevier, vol. 194(C), pages 59-72.
    17. Cai, W. & Singham, D.I., 2018. "A principal–agent problem with heterogeneous demand distributions for a carbon capture and storage system," European Journal of Operational Research, Elsevier, vol. 264(1), pages 239-256.
    18. Terry A. Taylor, 2001. "Channel Coordination Under Price Protection, Midlife Returns, and End-of-Life Returns in Dynamic Markets," Management Science, INFORMS, vol. 47(9), pages 1220-1234, September.
    19. Harish Krishnan & Roman Kapuscinski & David A. Butz, 2004. "Coordinating Contracts for Decentralized Supply Chains with Retailer Promotional Effort," Management Science, INFORMS, vol. 50(1), pages 48-63, January.
    20. Wang, Yulan & Zipkin, Paul, 2009. "Agents' incentives under buy-back contracts in a two-stage supply chain," International Journal of Production Economics, Elsevier, vol. 120(2), pages 525-539, August.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pal:jorapm:v:19:y:2020:i:5:d:10.1057_s41272-019-00214-5. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.palgrave.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.