Multi-stage supply chain coordination by revenue sharing contracts

The paper proposes a general model of supply chain contracts to coordinate a multi-stage supply chain, which is based on revenue sharing mechanisms. Using revenue sharing policies, we derive conditions under which the multi-stage supply chain wherein control is decentralized can be coordinated so that the maximum potential profit is realized and the win–win conditions for all supply chain actors are also given. From the model, we can see that ordering quantity of products, profits of the supply chain and the retailer's expected revenue are increased and the supply chain's efficiency is improved too. Our results are applicable for both multi-stage supply chain including a supplier and that not including any suppliers. Furthermore, the numerical example verifies the results of the model based on a four-stage serial supply chain.