Price and carbon emission reduction decisions and revenue-sharing contract considering fairness concerns

Multi-item EOQ inventory model in a two-layer supply chain while demand varies with promotional effort

http://www.optimization-online.org/DB_FILE/2004/10/967.pdf

A piecewise linearization framework for retail shelf space management models

Choosing an online retail channel for a manufacturer : direct sales or consignment?

Dynamic supply chain coordination under consignment and vendor-managed inventory in retailer-centric B2B electronic markets

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

This paper deals with an emerging research problem of coordinating a vertically separated channel under a price-dependent revenue-sharing mechanism, which has been used in eBay’s marketplace over two decades. We develop analytic models with bearing the following questions in mind: can the channel conducted by such a mechanism operate effectively and efficiently? Can it outperform the prevalent wholesale-price-only arrangement or the price-independent revenue sharing practice? If not, does it persist in certain decision bias that leads to a lower profit and channel inefficiency? To investigate these questions, we model the decision-making of the two firms in the supply chain as a Stackelberg game and carry out equilibrium analysis. Our analysis shows that the price-dependent R-S model does not outperform the price-independent, and only performs better than the wholesale-price-only mechanism in certain conditions, e.g., a higher retail share of channel-wide cost and/or a lower price-sensitivity coefficient of R-S function. Our findings suggest that it may be unworthy of adopting such a more complicated, price-dependent mechanism from a channel coordination perspective.

https://link.springer.com/content/pdf/10.1007%2Fs10100-010-0182-3.pdf

Effect of the price-dependent revenue-sharing mechanism in a decentralized supply chain

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.

/pdf/special-issue-section-on-ebay-s-fee-structure-from-a-channel-3g5emok9zy.pdf

Special Issue Section : On eBay`s Fee Structure from a Channel Coordination Perspective

Under a consignment contract with revenue sharing, a manufacturer decides on the retail price of displayed products, and retains ownership of the goods. For each item sold, the retailer deducts a 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. The retailer, acting as the leader, offers the manufacturer a revenue sharing contract, which specifies the percentage allocation of sales revenue between herself and the manufacturer. The manufacturer, acting as a follower, sets a self-interest retail price as a response. Using a price-sensitive linear demand function, we derive analytic solutions for both the centralized and decentralized regimes of the channel. We proved that the retailer tends to set a higher percentage allocation of the revenue and the manufacturer tends to choose a higher price under the non-cooperative game, which leads to a lower channel profit. Under the cooperative game, the channel can reach 100 percent efficiency, i.e., it can generate as much profit as the centralized channel can.

Hung Liang Cheng

Papers

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

Effect of the price-dependent revenue-sharing mechanism in a decentralized supply chain

Special Issue Section : On eBay`s Fee Structure from a Channel Coordination Perspective

Profit-Maximization Models for a Manufacturer-Retailer Channel under Consignment and Revenue Sharing Contract