Co-ordinating two echelon supply chain under trapezoidal type and unit selling price sensitive demand rate

Each firm in a supply chain must execute a precise set of actions to achieve optimal supply chain performance. As a result, supply chain excellence requires the coordination of disparate incentives. In this paper, the coordination issue of a two-echelon supply chain, consisting of a distributor and a retailer is discussed. The effect of revenue sharing contract mechanism is examined under trapezoidal type and unit selling price sensitive demand rate. The relationships between distributor and retailer are modeled by noncooperative Stackelberg games where retailer and distributor take turn as leader and follower. Analytical study reveals that revenue sharing contact is able to coordinate the system and leads to the win-win outcomes when distributor is Stackelberg leader. It is found that range of profit sharing fraction which leads to win-win situation is independent from the format of cost structure. Finally, numerical examples are presented to compare results between the different models.