Coordinating a three-stage supply chain with competing manufacturers

  • Lin Jiang
  • Yong Wang
  • Xiaoming Yan
  • Wei Dai
Original Paper


It is common for multiple manufacturers to compete in one common market. This paper considers a three-stage supply chain consisting of two competing manufacturers, one distributor, and one retailer. The two manufacturers’ products are substitutable with each other, and both manufacturers sell their products through the common distributor and the common retailer. In this supply chain, three contract mechanisms are discussed. The first one is wholesale-price (WP) contracts. The second one is pairwise revenue-sharing (PRS) contracts indicating that the revenues are shared by all pairs of adjacent entities. The third one is spanning revenue-sharing (SRS) contract indicating that the retailer simultaneously shares his revenues with all supply chain members. First, we discuss the effects of competition between manufacturers on both decentralized and centralized supply chains under the WP contracts. Second, we discuss the coordination mechanisms. The PRS and SRS contracts are used to coordinate the entire supply chain. We present the drawbacks of the PRS contracts in coordinating this competing supply chain and suggest using the SRS contract instead. After an SRS contract is adopted, it is evaluated using the WP contracts as a benchmark. The conditions necessary for an SRS contract to achieve a win–win outcome are then presented. Finally, some numerical examples are provided.


Competing supply chain Pairwise revenue-sharing contracts  Spanning revenue-sharing contract 



The work described in this paper was supported by Natural Science Foundation of China under grant 71272085, 71201027, and the Open Fund of Chongqing Key Laboratory of Logistics under grand CQKLL12003.


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Copyright information

© Springer-Verlag 2012

Authors and Affiliations

  1. 1.School of Economics and Business AdministrationChongqing UniversityChongqingPeople’s Republic of China
  2. 2.School of Mathematics and Information EngineeringChongqing University of EducationChongqingPeople’s Republic of China
  3. 3.School of ComputerDongguan University of TechnologyDongguanPeople’s Republic of China
  4. 4.School of Management and Information SystemsVictoria UniversityMelbourneAustralia

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