Modeling and Numerical Analysis of Revenue Sharing Contract Based on the Stackelberge Game Theory

Abstract

Considered supply chain in this article consists of one vendor and multiple retailers where the vendor applies vendor managed inventory. Considering vendor as a leader and retailers as followers, Stackelberg game theory is applied for modeling and analyzing this system. A general mixed integer nonlinear model is developed which can optimizes the performance of the system under revenue sharing contract, wholesale price contract and centralized structure. Based on this model, we numerically analyzed the performance of revenue sharing contract in the considered supply chain and four states for revenue sharing contract are analyzed at the end. Moreover, in each state, performance of the system under revenue sharing contract is compared with the performance of the system under wholesale price contract and centralized structure.

Keywords

• vendor managed inventory
• stackelberg game
• revenue sharing contract
• wholesale price contract
• centralized structure