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Channel coordination for multi-stage supply chains with revenue-sharing contracts under budget constraints

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  • Ilkyeong Moon
  • Xue-Hao Feng
  • Kwang-Yeol Ryu

Abstract

Real-life situations show that revenue-sharing (RS) contracts used in multi-stage supply chains have more complex structures than those that have been studied in recent research. In this paper, we study RS contracts in multi-stage supply chains where some members work with more than one upstream member. This general supply chain structure closely resembles those in actual practice under RS contracts. The literature on supply chain contracts has not adequately addressed contract design for supply chains with members who face budget constraints. We show that the RS contract could fail to coordinate supply chains when members are under particular budget constraints. In response, we propose a revenue-sharing with budget constraints (RSB) contract that adds no administrative cost. A properly designed RSB contract can be used to achieve supply chain coordination and to arbitrarily allocate profits in multi-stage supply chains. Our numerical results provide insights into ways supply chain coordination can be achieved under budget constraints through the RSB contract.

Suggested Citation

  • Ilkyeong Moon & Xue-Hao Feng & Kwang-Yeol Ryu, 2015. "Channel coordination for multi-stage supply chains with revenue-sharing contracts under budget constraints," International Journal of Production Research, Taylor & Francis Journals, vol. 53(16), pages 4819-4836, August.
    • Handle: RePEc:taf:tprsxx:v:53:y:2015:i:16:p:4819-4836
    DOI: 10.1080/00207543.2014.993438
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    Cited by:

    1. Ilkyeong Moon & Yoon Jea Jeong & Subrata Saha, 2020. "Investment and coordination decisions in a supply chain of fresh agricultural products," Operational Research, Springer, vol. 20(4), pages 2307-2331, December.
    2. Arab Momeni, Mojtaba & Bagheri, Mehdi, 2022. "Shared warehouse as an inter-supply chain cooperation strategy to reduce the time-dependent deterioration costs," Socio-Economic Planning Sciences, Elsevier, vol. 82(PA).
    3. Faranak Emtehani & Nasim Nahavandi & Farimah Mokhatab Rafiei, 2023. "Trade credit financing for supply chain coordination under financial challenges: a multi-leader–follower game approach," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 9(1), pages 1-39, December.

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