On channel coordination through revenue-sharing contracts with price and shelf-space dependent demand

NCUIR > School of Management at National Central University > Graduate Institute of Industrial Management > journal & Dissertation > Item 987654321/51665

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Title:	On channel coordination through revenue-sharing contracts with price and shelf-space dependent demand
Authors:	Chen,JM;Cheng,HL;Chien,MC
Contributors:	工業管理研究所
Keywords:	SUPPLY CHAIN COORDINATION;VIDEO RENTAL INDUSTRY;CONSIGNMENT CONTRACT;SLOTTING ALLOWANCES;RETAIL SPACE;COMPETITION;INVENTORIES;PERFORMANCE;DECISIONS;QUANTITY
Date:	2011
Issue Date:	2012-03-27 19:02:08 (UTC+8)
Publisher:	國立中央大學
Abstract:	This paper deals with the problem of coordinating a vertically separated channel under a consignment contract with revenue sharing. We consider the demand of the downstream player, e.g., the retailer, being price and shelf-space sensitive. Under such a setting, the retailer decides on the revenue-sharing percentage and the slotting fee. And the upstream player, e.g., the manufacturer, decides on the retail price and the size of shelf-space. For each item sold, the retailer deducts an agreed-upon percentage from the selling price and remits the balance to the manufacturer. We model the decision-making of the two firms as a Stackelberg game, and carry out equilibrium analysis for both the centralized and decentralized regimes of the channel, with and without cooperation. In addition, a profit sharing scheme through a two-part slotting allowance is proposed, which leads to Pareto improvements among channel participants. Our analysis reveals that the noncooperative game tends to set a higher revenue-sharing percentage and lower slotting fee by the retailer, and a higher retail price and less display space by the manufacturer, which leads to a lower channel profit. The consistent bias can be perfectly rectified by the cooperative game through the proposed two-part contractual agreement. (C) 2011 Elsevier Inc. All rights reserved.
Relation:	APPLIED MATHEMATICAL MODELLING
Appears in Collections:	[Graduate Institute of Industrial Management] journal & Dissertation

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