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Returns with wholesale-price-discount contract in a newsvendor problem

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  • Chen, Jing
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    Abstract

    We consider a newsvendor problem in a supply chain that consists of a manufacturer and a retailer. The manufacturer is the Stackelberg leader and the retailer is the follower. We examine how the manufacturer can contract a wholesale-price-only agreement with its retailer that maximizes its profit. We also propose a returns policy with a wholesale-price-discount scheme (returns-discount contract) that can achieve supply chain coordination. Using the wholesale price only contract as a benchmark, we show how the manufacturer sets a discounted wholesale price in a returns-discount contract that enhances both profits of the manufacturer and the retailer, as well as improves the supply chain efficiency.

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    Bibliographic Info

    Article provided by Elsevier in its journal International Journal of Production Economics.

    Volume (Year): 130 (2011)
    Issue (Month): 1 (March)
    Pages: 104-111

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    Handle: RePEc:eee:proeco:v:130:y:2011:i:1:p:104-111

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    Web page: http://www.elsevier.com/locate/ijpe

    Related research

    Keywords: Pricing Newsvendor problem Returns policy Supply chain coordination Demand uncertainty;

    References

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    Citations

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    Cited by:
    1. Arcelus, F.J. & Gor, Ravi & Srinivasan, G., 2012. "Price, rebate and order quantity decisions in a newsvendor framework with rebate-dependent recapture of lost sales," International Journal of Production Economics, Elsevier, vol. 140(1), pages 473-482.
    2. Ma, Peng & Wang, Haiyan & Shang, Jennifer, 2013. "Contract design for two-stage supply chain coordination: Integrating manufacturer-quality and retailer-marketing efforts," International Journal of Production Economics, Elsevier, vol. 146(2), pages 745-755.
    3. Xu, Xiaolin & Cai, Xiaoqiang & Chen, Youhua, 2011. "Unimodality of price-setting newsvendor's objective function with multiplicative demand and its applications," International Journal of Production Economics, Elsevier, vol. 133(2), pages 653-661, October.
    4. Wang, Jian-Cai & Lau, Amy Hing-Ling & Lau, Hon-Shiang, 2012. "Practical and effective contracts for the dominant retailer of a newsvendor product with price-sensitive demand," International Journal of Production Economics, Elsevier, vol. 138(1), pages 46-54.

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