Coordinating a Three-level Supply Chain with Service Level Contract and Profit Sharing Contract

摘要

We discuss the coordination mechanism in a three-level supply chain including one supplier, one distributor, and two retailers through using both the service level contract and profit sharing contract. Via numerical studies, we find that both the individual service level contract and profit sharing contract can achieve more profits for the whole supply chain. The profits can be further enhanced if both contracts are used simultaneously. The incentive of stakeholders to use profit sharing contract depends on various service levels. Our findings help stakeholders in the supply chain use centralized decision making to achieve maximal systemic profits through flexible contracts.