Coordination and incentives in a supplier-retailer rental information goods supply chain
AbstractIn rental information goods supply chain, such as movie DVDs and computers games, the retailer decides on the quantity of DVDs to purchase from the supplier, the rental fee, and the maximum rental duration. These decisions are directly affected by the price the supplier charges the retailers for the DVDs. In this paper we show that revenue sharing as compared to an independent strategy can result in lower rental fee, larger order quantities and increased profit for both the retailer and supplier. We also show that vertical integration (partnership) can result in higher profits across the supply chain compared to revenue sharing or an independent strategy. We also formulate a model to examine the use of incentives for early return of rented DVDs and show that they can increase profit by increasing circulations of DVDs. We also perform numerical sensitive analysis to examine the impact of rental lifecycle and shortage cost on rental fee, order quantity, and profits.
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Bibliographic InfoArticle provided by Elsevier in its journal International Journal of Production Economics.
Volume (Year): 123 (2010)
Issue (Month): 2 (February)
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Web page: http://www.elsevier.com/locate/ijpe
Supply chain Revenue sharing Rental fee;
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- Julie H. Mortimer, 2008. "Vertical Contracts in the Video Rental Industry -super-1," Review of Economic Studies, Oxford University Press, vol. 75(1), pages 165-199.
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- Kogan, Konstantin & Ozinci, Yaacov & Perlman, Yael, 2013. "Containing piracy with product pricing, updating and protection investments," International Journal of Production Economics, Elsevier, vol. 144(2), pages 468-478.
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