Research on Coordination of Supply Chain with Virtual Return Contract

A model is introduced with virtual return contract to resolve the problem that the manufacturer and retailer share the promotional costs. Comparing the profit of manufacturer and retailer in analyzing the period of virtual returns, a strategy of sharing the promotional costs is proposed. The optimal profits are obtained for manufacturer and retailer by confirming the interval of effort degree p for promoting products. A numerical example is conducted to demonstrate the effectiveness and feasibility of the coordination strategy.