An Analysis of Price-Only Contracts Based on Revenue Management

This paper considers a decentralized, two-echelon supply chain in which a manufacturer sells to a retailer who sells the product to the customers over a selling horizon of two periods and allocates the capacity to maximize her revenue, and the lone contract parameter is a wholesale price. The authors study the impact of downstream retailer's revenue management on the decision-making and performance of the entire channel. The paper begins with establishing a mathematical model of the problem, and then conducts numerical analysis of the model. The authors find that for centralized system, optimizing selling strategy contributes to reduce the output of the system, at the same time, increase the profit of the system: and for decentralized supply chain system, retailer's optimizing selling strategy enhances not only his own share of the profit of the channel, but also the efficiency and performance of system comparing to that under the classic wholesale price contract.