Research On Segmented Revenue Sharing Contract Considering Retailer's Sales Effort

With the homogenization and the shortening of life cycle of commodities,there exists sales effort in almost all commercial activities.The retailer's sales effort can expand the market demand and increase his own revenue,and its upstream supplier can also get additional revenue free of charge.But if the retailer undertakes all the sales effort cost under revenue sharing contract,it will lead to insufficient sales effort of the retailer which seriously affects the efficiency and market competitiveness of supply chain.In order to improve the efficiency of supply chain and strengthen cooperation among supply chain members,it is necessary for the upstream supplier to implement effective incentives for the retailer.Based on this,this paper considers the sales effort activities in the operation of enterprises,considers the two-echelon supply chain consisting of a single supplier and a single retailer,and the random demand of downstream retailer is affected by his sales effort level.The supplier as a leader plays a Stackelberg game with the retailer.Because of the low level of retailer's sales effort under the single proportional revenue sharing contract,the optimal order quantity of the retailer is lower than that of the supply chain.To motivate the retailer to increase his sales effort level,we design a new segmented revenue sharing proportion contract that differs from a traditional single revenue sharing contract.When the retailer's sales volume is higher than the optimal order volume under the traditional single revenue sharing contract,a higher revenue sharing ratio will be given to the retailer.This paper discusses the coordination of the supply chain and Pareto improvement conditions under the condition that the retailer bears all the sales effort cost and the supplier shares the cost of sales effort separately,and obtains the Stackelberg equilibrium solution of supply chain under the segmented revenue sharing contract.The results show that: Firstly,under the condition that the retailer bears all the sales effort cost alone,the segmented revenue sharing contract can not coordinate the supply chain,but can achieve Pareto improvement,that is segmented design makes the contract more advantageous in practice,and numerical analysis also verifies the theoretical results.Secondly,when the supplier shares the sales effort cost,the segmented revenue sharing proportion contract can make the supply chain achieve local coordination and the retailer's sales effort is further improved.Thirdly,comparing with the cost-sharing under the single proportion contract,the segmented design meets the interest of the leader supplier,and it is more beneficial to the supplier with the increasing of the second revenue sharing proportion.