Title: Searching for the best profit-sharing allocation in multi-echelon supply chain

Authors: Nguyen Van Hop

Addresses: School of Industrial Engineering and Management, International University, VNU-HCMC, Quarter 6, Linh Trung Ward, Thu Duc District, HoChiMinh City, Vietnam

Abstract: In this paper, we propose coordination procedures for a multi-echelon supply chain in which the appropriate profit-sharing rate is allocated for each supply chain member. The search process is first developed to maximise the total compromised profit of a two-member supply chain. From the achieved profit-sharing rate, the best ordering quantity is also determined. Then, a cascading procedure is also proposed for searching the best profit-sharing ratios for each member in the multi-echelon supply chain. Our proposed procedures are validated by comparing it with the fixed profit-sharing scheme. We have also investigated different scenarios to test the effect of demand variations on total cost at different profit-sharing rates. The obtained results are promising. [Submitted: 27 October 2020; Accepted: 22 January 2022]

Keywords: supply chain coordination; profit sharing; multi-echelon supply chain.

DOI: 10.1504/EJIE.2023.127749

European Journal of Industrial Engineering, 2023 Vol.17 No.1, pp.148 - 167

Received: 27 Oct 2020
Accepted: 22 Jan 2022
Published online: 15 Dec 2022 *