• Industrial Engineering and Management Systems
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• v.8 no.4
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• pp.213-220
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• 2009

A revenue sharing contract is one of the mechanisms that coordinate decision makers in a decentralized supply chain toward the consensual goal. The transfer prices between different echelons in the supply chain influence the total supply chain profits. The study aims to explore various transfer pricing heuristics on the supply chain coordination in terms of the supply chain profits and their interactions with the revenue sharing rate. A model is proposed for formulating the collaborative production and distribution planning in a decentralized supply chain with the revenue sharing mechanism. Experiment results indicate that the transfer price and the revenue sharing rate affect significantly the coordination. Among the studied pricing heuristics, the variable-cost pricing method led to the best SC profits. Raising the revenue sharing rate reduced the SC profits no matter what heuristics were employed. Furthermore, the experiments provide us clues for finding the optimal transfer price for the supply chain.

• Journal of the Korean Operations Research and Management Science Society
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• v.34 no.3
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• pp.55-69
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• 2009

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.

• Journal of Distribution Science
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• v.20 no.6
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• pp.125-135
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• 2022

Purpose: The revenue sharing contract has been used in various industries and it is expected to coordinate the individual companies' operations in a way to improve the whole supply chain performance. This study evaluates the performance of the revenue sharing contract to find out whether this contract achieves its original goal, the supply chain coordination. Research design, data, and methodology: The profit optimization models are developed to represent two stage supply chain system with a supplier and a buyer. By using the numerical examples of the proposed mathematical models, this study examines whether this supply chain contract coordinates the supply chain system. Results: The numerical examples show that the revenue sharing contract does not make the same supply chain profit as the centralized system does. With the proper combination of the wholesale price discount rate and revenue share ratio, both manufacturer and retailer can obtain increased profits from the revenue sharing contract. Conclusions: The outcomes of the numerical analysis imply that the revenue sharing certainly improves the supply chain performance but it does not fully coordinate the supply chain system. By controlling the wholesale price and revenue share ratio, every supply chain member can be beneficiaries of this supply chain contract.

• The Journal of Industrial Distribution & Business
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• v.13 no.3
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• pp.1-12
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• 2022

Purpose: The revenue sharing contract has been widely used in industries, and its ability to coordinate the supply chain system has been studied by numerous researchers. By reviewing the representative studies on the revenue sharing contract, this study intends to analyze the key features of this coordinating contract and identify its potential to be a more advanced coordination program than the original contract. Research design, data, and methodology: This study reviews past studies on the revenue sharing contract. The selected studies are investigated with a focus on how this contract is described to realize the supply chain coordination and the key issues that they address. Results: The literature review reveals that the revenue sharing contract requires standardized details about what and how to share. This study also finds additional issues that need to be addressed by researchers to improve this coordinating contract. Conclusions: Future researchers are advised to unify the detailed contents of the revenue sharing contract to confirm that it successfully coordinates the supply chain system. In addition, this study proposes key research issues that would enhance the role of revenue sharing contract as a supply chain coordination program.

• The Journal of Industrial Distribution & Business
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• v.14 no.9
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• pp.21-30
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• 2023

Purpose: Focusing on the role of the special contract to collaborate the supply chain operations, this study investigates how the revenue sharing contract affects the performance of Vendor Managed Inventory (VMI). Research design, data, and methodology: The optimization model is formulated to represent two stage supply chain system where the supplier and retailer manage the operations to maximize their own profits. Three supply chain models including the traditional system, VMI, and VMI with revenue sharing contract are compared in the numerical examples. Results: According to the numerical analysis, the entire supply chain system has greater profit under VMI than the traditional system, while VMI alone sacrifices the supplier's profit. With the proper sets of revenue share ratio and wholesale price discount rate, VMI with revenue sharing contract results in the increased profit for both supplier and retailer compared with VMI alone as well as the traditional system. Conclusions: The numerical examples imply that VMI, when it is combined with the revenue sharing contract, can be the effective collaboration program that satisfies every supply chain member. To make VMI with revenue sharing contract to be fair to all supply chain members, they need to agree on the appropriate contract content.

• Journal of Distribution Science
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• v.22 no.1
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• pp.95-103
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• 2024

Purpose: Focusing on the complex supply chain operations beyond the simple dyadic relationship, this study evaluates the performance of the revenue sharing contract in three stage supply chain system. Research design, data, and methodology: The optimization model is developed to describe the supply chain system where one manufacturer, one wholesaler, and one retailer exist and pursue the maximum level of their own profits. In the numerical examples of the proposed supply chain model, two types of the revenue sharing contract, pairwise and spanning methods, are tested and their performances are compared with the traditional system. Results: The numerical analysis reveals that both types of the revenue sharing contract outperform the traditional system. All supply chain members can achieve the improved profits only when they determine the proper combination of revenue share ratios and price discount rates. Conclusions: This study finds out that both pairwise and spanning revenue sharing contracts can make the positive outcome that is acceptable to all members in three stage supply chain system. When the proper contract content is agreed among the supply chain members, the revenue sharing contract has the potential to be the practically feasible collaboration program for the multiple stage supply chain system.

• Proceedings of the Korea Technology Innovation Society Conference
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• 2000.05a
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• pp.483-492
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• 2000

In this paper, we explore the economic principle behind the revenue-sharing rule for interconnection charges. First, we assert that firms can collude by splitting tile revenues equally i.e., choosing the revenue-sharing ratio equal to l/2. Also, we characterize the optimal revenue-sharing ratio in a model of horizontal interconnection and discuss the relation between the optimal ratio and the optimal access price.

• Journal of Korean Society for Quality Management
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• v.46 no.4
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• pp.959-972
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• 2018

Purpose: This study developed a simulation model that incorporates the uncertainty of demand and yield to obtain optimized results for supply chain coordination within environmental constraints. The objective of this study is to examine whether yield management for perishable products can achieve the goal of supply chain coordination between a single buyer and a single supplier under a variety of environmental conditions. Methods: We investigated the efficiency of a revenue-sharing contract and a wholesale price contract by considering demand and yield uncertainty, profit maximizing ratio, and success ratio. The implications for environmental variation were derived through a comparative analysis between the wholesale price contract and the revenue-sharing contract. We performed Monte Carlo simulations to give us the results of an optimized supply chain within the environments defined by the experimental factors and parameters. Results: We found that a revised revenue-sharing contracting model was more efficient than the wholesale price contract model and allowed all members of the supply chain to achieve higher profits. First, as the demand variation (${\sigma}$) increased, the profit of the total supply chain increased. Second, as the revenue-sharing ratio (${\Phi}$) increased, the profits of the manufacturer gradually decreased, while the profits of the retailer gradually increased, and this change was linear. Third, as the quality of yield increased, the profits of suppliers appear to increased. At last, success rate was expressed as the profit increased in the revenue-sharing contract compared to the profit increase in the wholesale price contract. Conclusion: The managerial implications of the simulation findings are: (1) a strategic approach to demand and yield uncertainty helps in efficient resource utilization and improved supply chain performance, (2) a revenue-sharing contract amplifies the effect of yield uncertainty, and (3) revised revenue-sharing contracts fetch more profits for both buyers and suppliers in the supply chain.

• Industrial Engineering and Management Systems
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• v.9 no.2
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• pp.97-106
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• 2010

Can eBay.com's fee structure coordinate the channel? It's a critical strategic problem in e-commerce operations and an interesting research hypothesis as well. eBay's fees include three parts: monthly subscription fee, insertion fee, and final value fee (i.e., a revenue sharing portion), which represent a generic form of revenue sharing fee structure between the retailer and the vendor in a supply chain. This research deals with such a channel consisting of a price-setting vendor who sells products through eBay's marketplace exclusively to the end customers. The up- and down-stream channel relationship is consignment-based revenue sharing. We use a game-theoretic approach with assumption of the retailer (i.e., eBay.com) being a Stackelberg-leader and the vendor being a follower. The Stackelberg-leader decides on the terms of revenue sharing contract (i.e., fee structure), and the follower (vendor) decides on how many units to sell and the items' selling price. This study formulates several profit-maximization models by considering the effects of the retail price on the demand function. Under such settings, we show that eBay's fee structure can improve the channel efficiency; yet it cannot coordinate the channel optimally.

• Journal of the Korean Operations Research and Management Science Society
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• v.42 no.1
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• pp.1-17
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• 2017

This study investigates a buyer-supplier supply chain, in which a buyer delegates the production process to a supplier as in many practices. The consumer's buying intention and overall supply chain performance are affected not only by the buyer's decision on sales price but also by the supplier's decision on product quality. Therefore, the buyer has a motivation to control the supplier's quality investment. Among various incentive schemes that the buyer can adopt in practice, we consider a revenue-sharing contract and investigate its unique characteristics. By comparison with a typical wholesale price contract, we reveal that the revenue-sharing contract can enhance supply chain's overall performance, including quality, demand, and profits of not only overall supply chain but also each player. We contribute to the academia and the supply chain practice by providing important guidelines in adopting incentive schemes and effectively managing product quality in a supply chain.