Study On Revenue Sharing Contract In Retailer-led Two-stage Supply Chain

Among the many problems about the supply chain mana gement, supply chaincoordination has been a hot research. Supply chain contract is an extremely important wayin the supply chain coordination mechanism, naturally, more and more researchers soughtafter. Revenue sharing contract is one of the most common and important supply chaincontract. In the the previous, economic is underdeveloped, the supplying is less than thedemand, supplier occupy a dominant position in the supply chain. So the domestic revenuesharing contract for the supply chain coordinatio n are mostly concentrated in thesupplier-led supply chain, there is little specifically for retailer-led supply chain. However,with the continuous progress of science and technology and the development of economic,the market has changed from a seller’s market to a buyer’s market. Meeting customers’demand is the core competition in the market. As one of the closest to the customer in thesupply chain, retailer can quickly and accurately grasp the market demand, which bringchanges between retailer and supplier. Besides, along with the development of informationtechnology, chain management become more and more popular, retailer are becoming everlarger and the right of retailer is enhanced. In this context, the retailer-led supply chain isrising up. Revenue sharing contract has a very important position in the coordination of thesupplier-led supply chain, supply chain coordination can be achieved under a variety ofconditions. In the retailer-led supply chain, what is the performance of revenue sharingcontract under different specific condition. We are very interested in it.This article is based on the idea, the use of Stackelberg game theory in economicstheory and game theory to study revenue sharing contract in the two-stage supply chainwhich is consist of a supplier and a retailer and retailer is the dominant enterprise. Firstly,we compare the revenue sharing contract between the supplier-led supply chain and theretailer-led supply chain. Using the comparative analysis result to identify the similaritiesand differences between the two different supply chain. Then we study the revenue sharingcontract when take the impact of the retail price into account and in considering the following two conditions. When it is oversupply, residual value losses a nd when it is inshort supply, the retailer can add additional order. Finally, taking the effect of price and thesupplier production costs of asymmetric information into account when implement therevenue sharing contract. The result is that the most impo rtant difference of the revenuesharing contract implement between the supplier-led supply chain and the retailer-ledsupply chain is the decision-making body and the sequence of Stackelberg game. When thedemand is relevent to retail price, revenue sharing contract can achieve perfect coordinationof the supply chain. The dominant retailer will take advantage of the strong right to extendhis own profits and supplier can only gain retained profits. When the demand is relevent tothe retail price and the supplier’s production cost information asymmetry, revenue sharingcontract can only achieve pareto improvement and can not achieve the perfect coordinationof the supply chain.