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Revenue Share Contract Design with Marketing Strategy Types of Supplier

Author

Listed:
  • Hua He

    (Management School of Xihua University, Chengdu, China)

  • Changsong Ma

    (Tian Fu College of SouthWestern, University of Finance and Economics, Chengdu, China)

Abstract

In this paper, we design a revenue share contract when a supplier is the leader and a retailer is the follower in a two-echelon supply chain. The innovation lies in dividing the supplier’s marketing strategies into two types: the profit oriented and the sales oriented to distinguish the different decision objectives from previous literatures assuming the supplier and retailer are both profit oriented. The paper uses the revenue share contract to reach supply chain coordination and Pareto optimality in the supply chain with the profit-oriented suppliers. However, the contract makes supply chain collaboration solutions and the Pareto improvement with the sales oriented supplier conditional. Numerical examples are given to illustrate these cases.

Suggested Citation

  • Hua He & Changsong Ma, 2018. "Revenue Share Contract Design with Marketing Strategy Types of Supplier," Asia-Pacific Journal of Operational Research (APJOR), World Scientific Publishing Co. Pte. Ltd., vol. 35(02), pages 1-12, April.
    • Handle: RePEc:wsi:apjorx:v:35:y:2018:i:02:n:s021759591840002x
    DOI: 10.1142/S021759591840002X
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    References listed on IDEAS

    as
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    7. Chakraborty, Tulika & Chauhan, Satyaveer S. & Vidyarthi, Navneet, 2015. "Coordination and competition in a common retailer channel: Wholesale price versus revenue-sharing mechanisms," International Journal of Production Economics, Elsevier, vol. 166(C), pages 103-118.
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