The impact of revenue sharing and rebate contract on short life cycle: A case of slow moving food products

In this paper we present a theoretical framework for the role of two supply chain contracts: Revenue sharing which is implemented once both partners agree on contracting parameters and rebate as a result of retailer´s efforts to sell more than the maximum quantity agreed under revenue contract. The retailer is aware about the demand and short life cycles of the products he sells and he would like to sell fast moving food product to avoid inventory costs. However, added advantages may entice the retailer to stock more slow moving food products because of anticipated higher revenue. Through coordination, the processor can utilize the retailer´s information to reduce demand uncertainty and thus improving forecast accuracy, efficient planning, distribution and smoothing production processes and therefore achieving better customer value and more revenue at lower cost.