Studies on the Impacts of Revenue Sharing in a Supply Chain

This paper studies the impacts of revenue sharing in a supply chain in which a supplier sells a single product to a retailer who faces uncertain demand.By modeling the interaction between the supplier and the retailer as a Stackelberg game the optimal decisions of both parties are obtained.Further analysis of the impacts on order quantity,profit and profit allocation is performed.This paper shows that under revenue sharing the retailer's profit is increased but profit share is decreased.Revenue sharing benefits supplier mostly.Pursuing greater profit share is another important reason for supply chain misalignments.