Encroachment strategy and revenue-sharing contract for product customization

This paper investigates the optimal encroachment strategy of product customization and revenue-sharing contract in a two-stage supply chain consisting manufacturer (CM) an original equipment (OEM). In addition to producing wholesaling standard products for OEM, CM has motive manufacture customized under store brand encroach end consumer market. Stackelberg game models with different strategies (encroachment or no-encroachment) both decentralized centralized chains are explored. Models analyzing CM’s rare. Besides, this characterizes vertical partnership horizontal competitive relationships between members. The findings show that it is unprofitable on retailing market when acceptance degree low. There threshold value level can gain positive demand. Interestingly, as leader, OEM always suffers from encroachment. Then designed fully integrate obtain contract-implementing Pareto zone . Furthermore, numerical example developed, demonstrating validity obtained analytical results. On basis, some suggestions industry managers discussed form managerial insights.