Document Type : Research Paper


1 Department of Logistics and Supply Chain Engineering, School Of Industrial Engineering, Iran University of Science and Technology (IUST)

2 Department of Logistics and Supply Chain Engineering, School of Industrial Engineering, Iran university of Science and Technology (IUST)


This paper deals with an issue of supply chain coordination that is coordinated under the revenue sharing contract. Demand is one of the most effective factors in modeling inventory systems. In the retail industry, companies have to fill/empty their products into the retail stores in a certain time based on predetermined contract. So, the question is of which products should be mostly allocated into shelf spaces. Optimal shelf space allocation in the retail industry, plays an important role in the sale of products and retail profitability. In addition, demand can be controlled by changing in prices. Hence as shown in this research, considering various factors such as price, allocated shelf space and also the effect of product brand image and advertising into the demand, a new demand function can be developed. Accordingly, the modeling has been conducted in three decentralized, centralized, and coordinated structures. In the developed model Stackelberg game has been employed and has shown how the revenue sharing contract leads to a win-win outcome in the supply chain. Finally, to clarify the model, a numerical example is provided and sensitivity analysis is performed on some of the effective parameters of the model. In addition, the results of sensitivity analysis showed that the model is more sensitive to the price elasticity on demand, and thus, more attention should be paid to this parameter in real world.