WSEAS Transactions on Business and Economics
Print ISSN: 1109-9526, E-ISSN: 2224-2899
Volume 15, 2018
AHP-Based Decision-Making Model for Supply Chain Coordination by a Modified Revenue-Sharing Contract Type
Authors: Viktor Molnar, Zoltan Musinszki, Tamas Faludi
Abstract: The efficiency of supply chains can be enhanced in several ways. One of them is the optimization of coordination mechanisms. Supply chain coordination is the course of activities by which a chain member tries to increase its profits through the quantity sold and the price. Coordination by contract types is one of the most widely studied topics in supply chain management. Depending on the market situation, companies can chose among several solutions of contracting. In this paper a contract that applies revenue-sharing rates is analyzed. This type of contract offers a relatively flexible determination of rates of profits of chain members and is suitable for a fair division of profits as well. However, the bargaining power of members differs in practice, meaning that they tend to move towards an unbalanced direction: the traditional decentralized setting in which simple wholesale prices and individual profit interests dominate. In our research a model was extended to allow a fairer profit division among the members while keeping the distorted difference of the decentralized setting, but only on a much lower level. This mixed model serves as a happy medium between the two contract types. The model is generalized for sequential supply chains and a case study-based decision-making model applying the Analytic Hierarchy Process (AHP) is introduced that can help in supporting decision-makers in choosing the most suitable rate of revenue sharing in a given situation.
Keywords: Supply chain coordination, Revenue-sharing contract, Centralized setting, Decentralized setting, Analytic Hierarchy Process
Pages: 273-281WSEAS Transactions on Business and Economics, ISSN / E-ISSN: 1109-9526 / 2224-2899, Volume 15, 2018, Art. #26