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Mean-variance analysis of supply chains under wholesale pricing and profit sharing schemes


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  • Wei, Ying
  • Choi, Tsan-Ming
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    In this paper, we explore the use of a wholesale pricing and profit sharing scheme (WPPS) for coordinating supply chains under the mean-variance (MV) decision framework. We first analytically establish the necessary and sufficient conditions for coordinating the centralized supply chain by WPPS. We then show that there exists a unique equilibrium of the Stackelberg game with WPPS in the decentralized case. After that, we discuss the information asymmetric case in which the retailer can be benefited by pretending to be more risk averse. Finally, we propose a new measure for the manufacturer to prevent this cheating from happening. Insights are generated.

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    Bibliographic Info

    Article provided by Elsevier in its journal European Journal of Operational Research.

    Volume (Year): 204 (2010)
    Issue (Month): 2 (July)
    Pages: 255-262

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    Handle: RePEc:eee:ejores:v:204:y:2010:i:2:p:255-262

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    Keywords: Supply chain management Mean-variance analysis Supply chain coordination;


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    Cited by:
    1. Xu, Guangye & Dan, Bin & Zhang, Xumei & Liu, Can, 2014. "Coordinating a dual-channel supply chain with risk-averse under a two-way revenue sharing contract," International Journal of Production Economics, Elsevier, vol. 147(PA), pages 171-179.
    2. Choi, Tsan-Ming & Chiu, Chun-Hung, 2012. "Mean-downside-risk and mean-variance newsvendor models: Implications for sustainable fashion retailing," International Journal of Production Economics, Elsevier, vol. 135(2), pages 552-560.
    3. Yeung, Wing-Kwan & Choi, Tsan-Ming & Cheng, T.C.E., 2011. "Supply chain scheduling and coordination with dual delivery modes and inventory storage cost," International Journal of Production Economics, Elsevier, vol. 132(2), pages 223-229, August.
    4. Xiong, Huachun & Chen, Bintong & Xie, Jinxing, 2011. "A composite contract based on buy back and quantity flexibility contracts," European Journal of Operational Research, Elsevier, vol. 210(3), pages 559-567, May.


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