Analysis of a Revenue Sharing Contract in a Reverse Supply Chain

ginal Equipment Manufacturers that engage in the remanufacturing business fully or partially outsource take back activities. Although outsourcing reverse activities seems to be a reasonable option, it may result in significant inefficiencies due to decentralization. Several contracting mechanisms have been proposed to reduce the inefficiencies in the forward chains. However, the effectiveness of these contracts has not been fully investigated in reverse chains. In this study, we investigate a two-echelon reverse supply chain, consisting of a remanufacturer and a collector in a single-period setting. The collector is in charge of acquiring used products from end customers by paying an acquisition price per unit of used products. The collected products are then sold to the remanufacturer who faces a random demand for remanufactured products. We first consider the centralized setting and derive the optimal acquisition price. Then, we study the decentralized setting under remanufacturer’s lead and collector’s lead. In both cases, we demonstrate that as long as the total cost of reverse activities are constant, the channel performance is independent of how these costs are distributed among the parties. Next, we focus on coordination issues and show that there exists a menu of revenue sharing contracts that can coordinate the reverse supply chain and allows for arbitrary allocation of total channel profit between the parties.
International Conference on Operations Research, (6 - 08 Eylül 2017)


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Citation Formats
İ. S. Bakal, “Analysis of a Revenue Sharing Contract in a Reverse Supply Chain,” presented at the International Conference on Operations Research, (6 - 08 Eylül 2017), Berlin, Almanya, 2017, Accessed: 00, 2021. [Online]. Available: