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Using revenue sharing to create win–win in the video rental supply chain

Author

Listed:
  • J A A van der Veen

    (Universiteit Nyenrode)

  • V Venugopal

    (Universiteit Nyenrode)

Abstract

Recent developments in video rental supply chains seem to indicate that revenue sharing contracts are beneficial to all parties involved in the industry. This paper illustrates a theoretical underpinning of the observed practice. A video rental supply chain is modelled to study pricing and replenishment decision making by the two autonomous firms in the chain, namely a movie studio producing the tapes and a video rental shop renting the tapes to customers. In the model the movie studio is to set the price for selling the tapes to the video rental store and the video rental shop must decide the number of copies of the new movie videotape it should purchase. The paper illustrates that revenue sharing contract can optimize the chain and bring win–win situations to the players in the industry.

Suggested Citation

  • J A A van der Veen & V Venugopal, 2005. "Using revenue sharing to create win–win in the video rental supply chain," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 56(7), pages 757-762, July.
    • Handle: RePEc:pal:jorsoc:v:56:y:2005:i:7:d:10.1057_palgrave.jors.2601879
    DOI: 10.1057/palgrave.jors.2601879
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    1. repec:bla:jindec:v:49:y:2001:i:3:p:223-45 is not listed on IDEAS
    2. James D. Dana, Jr. & Kathryn E. Spier, 2001. "Revenue Sharing and Vertical Control in the Video Rental Industry," Journal of Industrial Economics, Wiley Blackwell, vol. 49(3), pages 223-245, September.
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    Cited by:

    1. Becker-Peth, Michael & Thonemann, Ulrich W., 2016. "Reference points in revenue sharing contracts—How to design optimal supply chain contracts," European Journal of Operational Research, Elsevier, vol. 249(3), pages 1033-1049.
    2. Retsef Levi & Georgia Perakis & Cong Shi & Wei Sun, 2020. "Strategic Capacity Planning Problems in Revenue‐Sharing Joint Ventures," Production and Operations Management, Production and Operations Management Society, vol. 29(3), pages 664-687, March.
    3. J-M Chen & H-L Cheng & I-C Lin, 2011. "On channel coordination under price-dependent revenue-sharing: can eBay's fee structure coordinate the channel?," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 62(11), pages 1992-2001, November.
    4. 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.
    5. Pan, Kewen & Lai, K.K. & Leung, Stephen C.H. & Xiao, Di, 2010. "Revenue-sharing versus wholesale price mechanisms under different channel power structures," European Journal of Operational Research, Elsevier, vol. 203(2), pages 532-538, June.
    6. Hu, Benyong & Xu, Dong & Meng, Chao, 2017. "Inconsistency of a retailer's optimal policies and channel performance under revenue sharing contracts," International Journal of Production Economics, Elsevier, vol. 183(PA), pages 53-65.
    7. Lau, Amy Hing Ling & Lau, Hon-Shiang & Wang, Jian-Cai, 2008. "How a dominant retailer might design a purchase contract for a newsvendor-type product with price-sensitive demand," European Journal of Operational Research, Elsevier, vol. 190(2), pages 443-458, October.
    8. Li Cui & Siwei Guo & Hao Zhang, 2020. "Coordinating a Green Agri-Food Supply Chain with Revenue-Sharing Contracts Considering Retailers’ Green Marketing Efforts," Sustainability, MDPI, vol. 12(4), pages 1-16, February.
    9. Huang, Yeu-Shiang & Huang, Wei-Jeh & Fang, Chih-Chiang, 2018. "Coordination for distribution of motion pictures in the context of piracy," Journal of Business Research, Elsevier, vol. 85(C), pages 209-225.
    10. Kunter, Marcus, 2012. "Coordination via cost and revenue sharing in manufacturer–retailer channels," European Journal of Operational Research, Elsevier, vol. 216(2), pages 477-486.
    11. Panda, Shibaji, 2014. "Coordination of a socially responsible supply chain using revenue sharing contract," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 67(C), pages 92-104.
    12. Saha, Subrata, 2013. "Supply chain coordination through rebate induced contracts," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 50(C), pages 120-137.
    13. Khouja, Moutaz & Rajagopalan, Hari K. & Sharer, Elizabeth, 2010. "Coordination and incentives in a supplier-retailer rental information goods supply chain," International Journal of Production Economics, Elsevier, vol. 123(2), pages 279-289, February.
    14. Gheidar Kheljani, J. & Ghodsypour, S.H. & O'Brien, C., 2009. "Optimizing whole supply chain benefit versus buyer's benefit through supplier selection," International Journal of Production Economics, Elsevier, vol. 121(2), pages 482-493, October.
    15. 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.
    16. Hu, Shu & Dai, Ying & Ma, Zu-Jun & Ye, Yu-Sen, 2016. "Designing contracts for a reverse supply chain with strategic recycling behavior of consumers," International Journal of Production Economics, Elsevier, vol. 180(C), pages 16-24.
    17. Adida, Elodie & Ratisoontorn, Nantaporn, 2011. "Consignment contracts with retail competition," European Journal of Operational Research, Elsevier, vol. 215(1), pages 136-148, November.
    18. 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.
    19. Rubi Das & Abhijit Barman & Pijus Kanti De, 2022. "Integration of pricing and inventory decisions of deteriorating item in a decentralized supply chain: a Stackelberg-game approach," International Journal of System Assurance Engineering and Management, Springer;The Society for Reliability, Engineering Quality and Operations Management (SREQOM),India, and Division of Operation and Maintenance, Lulea University of Technology, Sweden, vol. 13(1), pages 479-493, February.
    20. Daehyeon Park & Jinhyeong Jo & Doojin Ryu, 2021. "Incentive Contracts for Sustainable Growth of Small or Medium-Sized Enterprise," Sustainability, MDPI, vol. 13(9), pages 1-10, April.

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