A New Discriminating Revenue Sharing contract for Supply Chain Coordination with Retail Competition

This paper studies the issue of channel coordination for a supply chain consist of one supplier and two retailers, facing stochastic demand that is sensitive to both sales effort and retail price. In the presence of mentioned conditions especially competing retailers, classical revenue Sharing contract is unable to establish channel coordination through the supply chain. A new discriminating Revenue Sharing contract has been developed and it is shown that it can assure the channel coordination through the proposed chain. Due to the stochastic nature of the market demand and the interaction between decision variables, simulation could help us modeling and analyzing the problem. Simulation optimization is then used to find the optimum or near optimum set of decision variables in the cases of integrated supply chain or coordinated supply chain using contracts