Supply coordination by revenue sharing contracts

Supply coordination by revenue sharing contracts

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Article ID: iaor200513
Country: Netherlands
Volume: 89
Issue: 2
Start Page Number: 131
End Page Number: 139
Publication Date: Jan 2004
Journal: International Journal of Production Economics
Authors: ,
Keywords: supply chain
Abstract:

Supply chain (SC) coordination can be pursued by adopting a centralized or decentralized decision-making approach. The former option occurs when there is a unique decision maker in the SC, the latter when several independent actors make decision at the different SC stages. SC contracts are a useful tool to make the several SC actors of a decentralized setting behave coherently with each other, as if the chain were operated in a centralized fashion. In this paper, we propose a model of an SC contract aimed at coordinating a three-stage SC, which is based on the revenue sharing mechanism. This model allows the system efficiency to be achieved as well as it could improve the profits of all the SC actors, by tuning the contract parameters.

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