Author(s): Anil Kumar and Anubhav Singh Gangwar
Purpose: The main purpose was to see the impact of revenue sharing contracts in the supply chain and to find that revenue sharing contracts are needed to optimize individual profit. Design/methodology/approach: The Stackelberg leader-follower game strategy was used, and the model was modelled with a revenue sharing ratio. The revenue-sharing contract was taken in both cases, i.e., horizontal expansion and vertical expansion. Findings: It is seen that a revenue-sharing contract is always beneficial without any contract. Transfer cost rate, revenue sharing ratio, and salvage value terms were used to derive and see the Nash equilibrium. It has been achieved while seeing the results. A comparison of revenue-sharing contracts with a simple supply chain was done. Originality/value: It has been seen that every player can get his maximum profit with the optimal setting and revenue ratio that provide confidence in each player to sustain himself in the market.