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| Revenue Sharing Contract for a Supply Chain with Demand Depending on Promotion and Pricing |
| DAI Jiansheng |
| Kunming University of Science and Technology, Kunming, China |
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Abstract This paper employed CVaR approach to investigate the coordination of a supply chain with a risk-averse retailer, who exerts promotion effort and pricing decision. Firstly, optimal strategies of the retailer and of the supply chain were characterized in case of centralized decision and of decentralized decision, respectively. Secondly, it designed contract mechanisms to achieve channel coordination. Furthermore, it analyzed impact of risk aversion degree of the retailer on parameters of the coordination contract. Finally, a numerical example was carried out to confirm correctness and validity of the theoretical analysis. It showed that the supply chain can be coordinated by revenue sharing and cost sharing mechanism in the case of the retailer being risk neutral, but cannot work in the case of risk aversion. However, the contract mechanism mentioned above, mixed with floor price policy, can perfectly achieve coordination of the supply chain.
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Received: 26 July 2017
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