Revenue-and-Expense Sharing Contract for Closed-Loop Supply Chain Coordination in Multiple Retail Markets

With assumptions that the sale price affected the demand directly and the recycling price and the effort level of recycling affected the recycling amount, supply chain coordination models under centralized, decentralized and revenue-and-expense sharing contracts were proposed. Optimal decisions and profits of the participants in a closed-loop supply chain were analyzed. The study reveals that profits of forward and reserve supply chain under the decentralized contract are lower than those under the centralized one in a multiple retail market. Under the revenue-and-expense sharing contract, a perfect coordination of a closed-loop supply chain can be obtained with a proper wholesale price and a fair distribution of expenses, and the wholesale price, instead of conventional revenue distribution, is to be determined through negotiation. A numeric example was presented to demonstrate feasibility of the revenue-and-expense sharing contract