| Summary |
Chun-Wei Lin, 2007,06
Institute of Traffic and Transportation National Chiao Tung University
Price discount is one of the popular promotion ways in recent years. Suppliers offer temporary price reductions to retailers and the reductions last for some finite time. Retailers pass this giveback on to the end customers in order to achieve the anticipative sales goals and earn more profit.
When retailers provide the price reductions, the customers’ demand will change. Retailers must use the data of sales and stock during the price discount to plan for the ordering and inventory policy, in order to prevent the cost become too high resulting from too many inventories, or the goodwill loss resulting from the insufficient inventory. Nowadays, it is more general for supply chain to sign the contract in order to coordinate all the members. The revenue sharing contract is one of the useful contracts between suppliers and retailers. A supplier offers a lower wholesale price to a retailer to exchange for a percentage of the total revenue to increase the performance of the supply chain.
This research is to formulate the above situation. First of all, the retailer’s objective function of profit will be formed to obtain the optimal ordering frequency and the sale price. Second, the objective function of the profit after signing the revenue sharing contract will be formed. Then the discussion of the wholesale price and the percentage of the total sharing revenue, and the difference without the contract will be showed.
It is showed that retailers can raise profit by price discount. Suppliers can share the revenue and prevent loss by signing a revenue sharing contract. In general, both sides can benefit from price discount. The total profit will be higher if the revenue sharing contract is signed. When both sides have the same objective on profit, the total profit will be even higher than with different objectives. |
