Revenue-Sharing Contract Models for Logistics Service Supply Chains with Mass Customization Service

Abstract

The revenue-sharing contract is one of the most important supply chain coordination contracts; it has been applied in various supply chains. However, studies related to service supply chains with mass customization (MC) are lacking. Considering the equity of benefit distribution between the members of service supply chains, in this paper, we designed two revenue-sharing contracts. The first contract for the maximum equity of a single logistics service integrator (LSI) and single functional logistics service provider (FLSP) in a two-echelon logistics service supply chain was designed by introducing the fair entropy function (“one to one” model). Furthermore, the method is extended to a more complex supply chain, which consists of a single LSI and multiple FLSPs. A new contract was designed not only for considering the equity of an LSI and each FLSP but also for the equity between each FLSP (“one to $N$” model). The “one to one” model in three-echelon LSSC is also provided. The result exemplifies that, whether in the “one to one” model or “one to $N$” model, there exists a best interval of customized level when the revenue-sharing coefficient reaches its maximum.