Revenue-sharing Contract and Coordination of the Supply Chain with Production Rigidity

Research the coordination problem and the revenue-sharing contract between the material supplier and manufacturer of the supply chain upstream with the condition of production rigidity, finished commodities price exogenously and the commodity product technique is similar to the material. The results show: If the revenue of the commodity is much more than the opportunity cost of entrance into manufacturing, then the material supplier will choice enter into the downstream. And the entry level is up to the commodity price, the higher the price, the higher the degree of entry. However, in condition of the coordination on the supply chain, manufacturers buy the raw materials for at least half that of the total raw materials. Through comparing the revenue-sharing contract with the supply chain coordination, found that general revenue sharing contract can not achieve these supply chain coordination. And, by example, whether it was in the supply chain coordination or revenue-sharing contract, the material vendor takes on the major risks and benefits of the product price. That is because the supplier has the initiative.