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Mathematical Problems in Engineering
Volume 2015, Article ID 161486, 7 pages
http://dx.doi.org/10.1155/2015/161486
Research Article

Contracting Fashion Products Supply Chains When Demand Is Dependent on Price and Sales Effort

School of Management, Department of Business Administration, Jinan University, Guangzhou 510632, China

Received 15 May 2014; Revised 2 July 2014; Accepted 11 July 2014

Academic Editor: Pui-Sze Chow

Copyright © 2015 Ying Wei and Liyang Xiong. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

Abstract

This paper investigates optimal decisions in a two-stage fashion product supply chain under two specified contracts: revenue-sharing contract and wholesale price contract, where demand is dependent on retailing price and sales effort level. Optimal decisions and related profits are analyzed and further compared among the cases where the effort investment fee is determined and undertaken either by the retailer or the manufacturer. Results reveal that if the retailer determines the effort investment level, she would be better off under the wholesale price contract and would invest more effort. However, if the manufacturer determines the effort level, he prefers to the revenue-sharing contract most likely if both parties agree on consignment.