Incentive Mechanism in Two-stage Service Supply Chains Based on the Revenue Sharing Contract

When the service provider outsources some services to the supplier, the service supply chain will be formed. As the supplier offers services directly to the end customers, it is difficult to monitor the supplier's behavior by the service provider. Therefore an incentive mechanism to supplier will be quite significant in service supply chain. This paper studies the optimal incentive mechanism under the revenue sharing contract which is usually efficient in supply chain management. By setting up the incentive model, the research mainly discusses about the prior condition for the supplier to offer costly effort under the revenue sharing contract, the optimal incentive mechanism and the condition to validate incentive, etc. The result shows that: 1)It is unnecessary to offer an incentive to the service supplier in all service supply chains. 2)The incentive mechanism is available just in the service supply chains which comply with certain demand distributions. 3)There is a discontinuous point on the incentive payment curve.