A hybrid revenue-sharing option contract in a competitive supply chain with multiple outsourcing and mean-variance analysis

Ahmad Lotfi () and Parvaneh Samouei ()
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Ahmad Lotfi: Bu-Ali Sina university, Department of Industrial Engineering, Faculty of Engineering
Parvaneh Samouei: Bu-Ali Sina university, Department of Industrial Engineering, Faculty of Engineering

Operational Research, 2026, vol. 26, issue 1, No 14, 30 pages

Abstract: Abstract This study employs a combined revenue-sharing option contract (RSOC) to coordinate a supply chain consisting of an original equipment manufacturer (OEM) and multiple contract manufacturers (CMs). In this system, the OEM outsources equipment manufacturing to the CMs, with the production volume determined by the CMs. Market demand is uncertain, and both the OEM and CMs compete to maximize their utilities. Supply chain coordination (SCC) using two proposed strategies based on sub-supply chain and linearization approaches is investigated. Quantitative analyses demonstrate that the sub-supply chain approach effectively achieves SCC, enabling the game leader (OEM) to establish a win-win outcome by adjusting contract parameters. Similarly, the linearization approach yields configurations that can lead to mutually beneficial results for all parties. Findings indicate that supply chain coordination is feasible when the risk aversion threshold aligns with the contract parameters. Collectively, these strategies enhance coordination efficiency while addressing uncertainty and competitive dynamics.

Keywords: Supply chain coordination; Original equipment manufacturer; Contract manufacturer; Revenue sharing; Option contract; Outsourcing; Mean-Variance analysis (search for similar items in EconPapers)
Date: 2026
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DOI: 10.1007/s12351-025-01003-2

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