Integrated Revenue Sharing Contracts to Coordinate a Three-Echelon Supply Chain

C.-F. Hsueh and M.-S. Chang (Taiwan)


Supply chain management, revenue sharing contracts,channel coordination, linear.


This paper investigates an integrated revenue sharing (RS) contract for coordinating a three-echelon supply chain, comprising a manufacturer, a distributor and a retailer. The integrated RS contract requires that the retailer returns partial revenue directly to the distributor and the manufacturer. A linear model is proposed to determine the parameters of the contracts such that channel coordination and a win-win situation can be achieved. We show that any combination of parameters within the linear convex feasible region can achieve the maximum supply chain profit and increase each partner’s profit as well. The optimal combination of parameters that results “even increased profits” is also derived.

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