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Optimal Revenue Sharing in a Supply Chain of Rental Industries  

Park, Hae-Churl (중앙대학교 경영대학)
Cho, Jae-Eun (중앙대학교 경영학과 대학원)
Publication Information
Journal of the Korean Operations Research and Management Science Society / v.34, no.3, 2009 , pp. 55-69 More about this Journal
Abstract
It is often to apply revenue sharing models in rental industries which consist of a retailer and a wholesaler. This research analyzed the influences to profit of the supply chain if we adopt the revenue sharing model when the demand is uncertain and price sensitive. We found the conditions of the revenue sharing model to maximize the profit of the supply chain, and identified incentive compatible conditions for revenue sharing. It is proved that vertical integration guarantees maximization of profit for the supply chain. Also we found that it is possible to derive Incentive compatible schemes by controlling ranges of revenue sharing ratios.
Keywords
Rental Industry; Supply Chain; Vortical Integration; Incentive Compatibility; Revenue Sharing Model;
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