Revenue-sharing in decentralised assembly systems

In this paper, we study a decentralised supply chain with assembled products or jointly sold products. With the revenue-sharing contract, the assembler orders the parts from the independent suppliers based on the announced revenue-sharing rates and then assembles the final product. The involved parties pursue their own profits. Two-stage Stackelberg game is used to help formulate the model. We show the allocation rule of the revenue-sharing rates among the assembler and suppliers, the profits of the assembler and suppliers in both of fixed and variable transfer cost rates, respectively, and the conditions for the supply chain to be coordinated if the transfer cost rate is variable.