Optimal decisions and capacity coordination with joint contract in service supply chain

This paper discusses the contract model for a three-stage service supply chain which consists of a service demander, a service integration supplier and service suppliers with a contract service supplier and some temporary suppliers. It is proposed a joint contract of compensation and revenue sharing for the mathematical model. Our contribution in the case of meeting the uncertain demands of market is to promote the capacity level by stimulating suppliers which have to refrain from the waste of overcapacity. The relationship between profits, quantity of service capacity and variables for coordinating both upstream and downstream companies in the supply chain is discussed through numerical analysis and simulation. It is proved that capacity has connection with price, cost and contract parameters. The results show that enterprises can obtain optimal profits simultaneously at an approximate capacity level and the joint contract is able to coordinate the service supply chain.