Two Echelon Supply Chain with Vendor Managed Inventory and Revenue Sharing Contract under Shortage Gaming Scenario

This paper explores the idea of Vendor Managed Inventory (VMI) for curbing the bullwhip effect in a single vendor -multiple buyers supply chain under a revenue-sharing contract. The capacity-constrained vendor in a monopolistic environment allocates supply among buyers. Further, price-sensitive demand and VMI bound buyers to follow a revenue-sharing contract. Limited supply and price sensitive demand induces bullwhip effect. In such a scenario, an attempt has been made to develop NLPP models to calculate optimal wholesale price and buyers selling price to optimize the supply chain profit. The aforesaid model is compared with a less coordinated model to show the impact of revenue sharing contract on the bullwhip effect.