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Res."],"accepted":{"date-parts":[[2020,5,19]]},"published-print":{"date-parts":[[2021]]},"abstract":"<jats:p>Capacity planning, as a vital asset, is a challenge problem for firms in various industries, such as organic agriculture, apparels and high-tech industry. However, many manufacturers are conservative about their capacity investment for a variety of reasons. As a result, many retailers have the motivation to stimulate manufacturers to enhance the capacity level. In this paper, we propose a revenue sharing and capacity cost compensation contract to help the retailer stimulate her manufacturer to increase the capacity level. In the contract, the retailer keeps a portion of sales revenue and compensates for the manufacturer\u2019s capacity cost. They face a stochastic demand and play a Stackelberg game where the retailer acts as a leader and the manufacturer acts as a follower. We prove that the channel can be perfectly coordinated through our proposed contract. Moreover, we give a feasible range of profit distribution, in which both channel members can earn no less profit than that in non-cooperation. Meanwhile, comparing with centralized channel with multiplicative demand, we find that capacity in decentralized channel tends to be lower.<\/jats:p>","DOI":"10.1051\/ro\/2020056","type":"journal-article","created":{"date-parts":[[2020,5,21]],"date-time":"2020-05-21T08:07:37Z","timestamp":1590048457000},"page":"S1789-S1802","source":"Crossref","is-referenced-by-count":4,"special_numbering":"Supplement","title":["Coordinating a decentralized supply chain with capacity cost compensation"],"prefix":"10.1051","volume":"55","author":[{"given":"Feifei","family":"Shan","sequence":"first","affiliation":[]},{"given":"Xiaopei","family":"Dai","sequence":"additional","affiliation":[]},{"given":"Jinqi","family":"Men","sequence":"additional","affiliation":[]},{"given":"Feng","family":"Yang","sequence":"additional","affiliation":[]}],"member":"250","published-online":{"date-parts":[[2021,3,2]]},"reference":[{"key":"R1","first-page":"227","volume":"11","author":"Cachon","year":"2003","journal-title":"Handb. 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