Evaluating Performance of Cost Sharing Contract in Supply Chain Considering Price and Quality Dependent Demand
Evaluating Performance of Cost Sharing Contract in Supply Chain Considering Price and Quality Dependent Demand
Chungsuk RYU
초록
Purpose: This study investigates the impact of the cost sharing contract on the performance of the supply chain system, wherethe market demand is dependent on the product price and quality. Research design, data, and methodology: The profitmaximization model is formulated to describe two echelon supply chain system with a supplier and a retailer. Under the costsharing contract, the retailer shares a portion of the supplier’s quality improvement cost. By using the numerical examples, thisstudy examines how the cost sharing contracts with different cost share ratios perform. Results: The numerical analysis revealsthat the cost sharing contract can result in greater supply chain profit than the traditional system. Meanwhile, only with the properlydetermined cost share ratio, the cost sharing contract increases both supplier’s and retailer’s profits. Conclusions: This studysupports that the cost sharing contract would be the effective supply chain collaboration scheme that improves the supply chainperformance. To make the cost sharing contract beneficial for all supply chain members, they need to agree on the appropriatecontract content.