IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this article or follow this journal

Optimal Prices and Inventories Decisions on Returns Policy with Practical Examples Thorough a Stackelberg Game

  • Kuo-Hsien Wang

    ()

    (Takming University of Science and Technology)

  • Yu-Je Lee

    ()

    (Takming University of Science and Technology)

  • Che-Tsung Tung

    ()

    (Takming University of Science and Technology)

Registered author(s):

    This study explores a Stackelberg game that consists of a manufacturer who is a leader manufacturing newsvendor-type products, and two retailers who are two followers selling the products in a stochastic demand market that is divided into two various prices sub-markets allowing demand leakage from a high-priced market to a low-priced market. The objective of the game is that the manufacturer offers a returns policy contract in an effort that not only to maximize its expected profit by determining wholesale price and buy-back price, but also to improve the two retailers’ expected profits by determining their prices and order sizes. We develop a simple solution procedure to the case of uniformly distributed demand, and thereby conduct a string of examples incorporating with the factors of demand leakage rate, consumers’ price-sensitivity and demand variability. Many significant contributions of this study include: the chain should give up some sales opportunity in high price-sensitive markets and then offset back from low price-sensitive ones; the two retailers jointly bear the entire risk of demand uncertainty; and the returns policy contract indeed outperforms a price-only contract although it is not the Pareto improvement to low-priced market segment.

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

    File URL: http://www.hrmars.com/admin/pics/1870.pdf
    Download Restriction: no

    File URL: http://www.hrmars.com/admin/pics/1870.pdf
    Download Restriction: no

    Article provided by Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences in its journal International Journal of Academic Research in Accounting, Finance and Management Sciences.

    Volume (Year): 3 (2013)
    Issue (Month): 2 (April)
    Pages: 66-77

    as
    in new window

    Handle: RePEc:hur:ijaraf:v:3:y:2013:i:2:p:66-77
    Contact details of provider: Web page: http://hrmars.com/index.php/pages/detail/Accounting-Finance-Journal

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

    as in new window
    1. Yao, Z. & Leung, Stephen C.H. & Lai, K.K., 2008. "Analysis of the impact of price-sensitivity factors on the returns policy in coordinating supply chain," European Journal of Operational Research, Elsevier, vol. 187(1), pages 275-282, May.
    2. Martin A. Lariviere & Evan L. Porteus, 2001. "Selling to the Newsvendor: An Analysis of Price-Only Contracts," Manufacturing & Service Operations Management, INFORMS, vol. 3(4), pages 293-305, May.
    3. Zhang, Michael & Bell, Peter C. & Cai, Gangshu (George) & Chen, Xiangfeng, 2010. "Optimal fences and joint price and inventory decisions in distinct markets with demand leakage," European Journal of Operational Research, Elsevier, vol. 204(3), pages 589-596, August.
    4. Bose, Indranil & Anand, Paul, 2007. "On returns policies with exogenous price," European Journal of Operational Research, Elsevier, vol. 178(3), pages 782-788, May.
    5. Zhang, Michael & Bell, Peter C., 2007. "The effect of market segmentation with demand leakage between market segments on a firm's price and inventory decisions," European Journal of Operational Research, Elsevier, vol. 182(2), pages 738-754, October.
    6. Lau, Hon-Shiang & Lau, Amy Hing-Ling, 1999. "Manufacturer's pricing strategy and return policy for a single-period commodity," European Journal of Operational Research, Elsevier, vol. 116(2), pages 291-304, July.
    7. Barry Alan Pasternack, 1985. "Optimal Pricing and Return Policies for Perishable Commodities," Marketing Science, INFORMS, vol. 4(2), pages 166-176.
    Full references (including those not matched with items on IDEAS)

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    When requesting a correction, please mention this item's handle: RePEc:hur:ijaraf:v:3:y:2013:i:2:p:66-77. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Hassan Danial Aslam)

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.