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Strategic inventory: Manufacturer vs. retailer investment

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  • Moon, Ilkyeong
  • Dey, Kartick
  • Saha, Subrata

Abstract

This paper presents a two-period supply chain model under demand induced by selling price and investment effort in the presence of strategic inventory. We compared six different scenarios to identify optimal pricing decisions. An incremental quantity discount contract was applied to verify supply chain coordination. Our findings show that manufacturer-investment efforts cannot always persuade the retailer carrying strategic inventory to maintain harmony among supply chain participants; however, retailer-investment efforts can promote harmony when strategic inventory is used. The retailer’s decision to carry strategic inventory is catastrophic from the perspective of supply chain coordination, but benign for the decentralized supply chain.

Suggested Citation

  • Moon, Ilkyeong & Dey, Kartick & Saha, Subrata, 2018. "Strategic inventory: Manufacturer vs. retailer investment," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 109(C), pages 63-82.
    • Handle: RePEc:eee:transe:v:109:y:2018:i:c:p:63-82
    DOI: 10.1016/j.tre.2017.10.005
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    5. Xu, Xiaoping & He, Ping & Zhou, Li & Cheng, T.C.E., 2023. "Coordination of a platform-based supply chain in the marketplace or reselling mode considering cross-channel effect and blockchain technology," European Journal of Operational Research, Elsevier, vol. 309(1), pages 170-187.
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    9. Fei Zou & Yanju Zhou & Caihua Yuan, 2020. "The Impact of Retailers’ Low-Carbon Investment on the Supply Chain under Carbon Tax and Carbon Trading Policies," Sustainability, MDPI, vol. 12(9), pages 1-27, April.
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    15. Li, Jin & Yi, Liao & Shi, Victor & Chen, Xiding, 2021. "Supplier encroachment strategy in the presence of retail strategic inventory: Centralization or decentralization?," Omega, Elsevier, vol. 98(C).

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