Channel Coordination and Revenue Sharing with Price-Sensitive Demands
In this paper, we consider revenue sharing and franchise fees as coordination mechanisms in a supply chain system consisting of a supplier and a buyer with price-sensitive demand. The problem is analyzed as a Stackelberg Game in which the retailer acts as the leader by announcing his revenue share that he has chosen in advance, and the supplier acts as the follower by determining production retail price and thus delivery quantity for his product is determined. In such consignment relationship, the supplier retains ownership of the product. Making use of game theoretic analytical method, we compare the revenue sharing contract that the retailer gives to the supplier when they work jointly with that when they work independently. It is shown that revenue sharing is not sufficient to guarantee the systems profit maximization. By charging the retailer franchise fees to offset an amount equal to or more than his losses due to the decrease of his revenue share based on channel revenue maximization. It then shows that the mechanism of employing revenue sharing and franchise fees can achieve channel perfect coordination when demand is price-sensitive, meanwhile, the channel profits and individual profits achieved by employing revenue sharing and franchise fees are both larger than those achieved when they are decentralized decisions. Last, the numerical examples and simulation analysis are provided, which indicates the feasibility of the coordination mechanisms.
Supply Chain Management Contract Game Analysis Revenue Sharing Coordination Mechanisms
CAO Er-bao LAI Ming-yong LI Wei
School of Economics and Trade, Hunan University, P.R.China, 410082;Logistics Information and Simulat Logistics Information and Simulation Technology Laboratory of Hunan Province, P.R.China, 410079
国际会议
2007 International Conference on Dtrategic Management（2007年战略管理国际会议）
成都
英文
572-577
2007-04-19（万方平台首次上网日期，不代表论文的发表时间）