Supply Chain Coordination Based on Revenue-Sharing Contracts under Random Demand

To a two-echelon supply chain system consisting of one manufacturer and one retailer under random demand, the game models about decentralized decision and centralized decision are constructed in which the manufacturer is the leader and the retailer is the follower. The retailer’s optimal purchasing strategies about two conditions above are given and the supply chain expected total profits under unique purchasing strategies of the retailer are compared with. Then the relations of supply chain expected total profit between with applying the revenue-sharing contracts situation and with the centralized decision situation are discussed. And the conditions to realize the supply chain perfect coordinating are defined. Finally, numerical analysis shows that applying the revenue-sharing contract in the decentralized supply chain could not only achieve the maximal overall expected performance but also allow both parties to benefit from it.