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Channel Performance Under Vendor Managed Consignment Inventory Contract With Additive Stochastic Demand

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  • Bieniek Milena

    (Maria Curie-Sklodowska University, Plac Marii Curie, - Sklodowskiej 5, 20-031 Lublin, Poland)

Abstract

Consignment as the shifting of the inventory ownership to a supplier is widely implemented in virtual market. In this form of business arrangement the supplier places goods at a retailer’s location without receiving payment, until the goods are sold. We consider a single period supply chain model, where the supplier contracts with the retailer with some probability of return. Market demand is additive, linearly price– dependent and uncertain. We focus on vendor managed consignment inventory (VMCI) channel, in which the supplier decides the consignment price and his service level and the retailer chooses the retail price. We study channel performance under VMCI setting by analysing how the model parameters influence decision quantities, channel profit and risk function. We also illustrate the obtained results by a numerical example, which explains the overall solutions well.

Suggested Citation

  • Bieniek Milena, 2018. "Channel Performance Under Vendor Managed Consignment Inventory Contract With Additive Stochastic Demand," Statistics in Transition New Series, Polish Statistical Association, vol. 19(3), pages 551-561, September.
    • Handle: RePEc:vrs:stintr:v:19:y:2018:i:3:p:551-561:n:9
    DOI: 10.21307/stattrans-2018-030
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    References listed on IDEAS

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