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Coordinating contracts for supply chains that market with mail-in rebates and retailer promotions

Author

Listed:
  • Shilei Yang

    (Southwestern University of Finance and Economics, Chengdu, P.R. China)

  • Charles L Munson

    (Washington State University, Pullman, USA)

  • Bintong Chen

    (University of Delaware, Newark, USA)

  • Chunming Shi

    (Wilfrid Laurier University, Waterloo, Canada)

Abstract

Marketing promotions are pervasive in industry, yet too often they are introduced without regard to their potential impact on the whole supply chain. This paper considers a cooperative business environment where a manufacturer and a retailer work interactively in determining their independent sales promotional actions. We use a newsvendor-modelling framework to study coordinating issues when the manufacturer provides mail-in rebates directly to consumers while the retailer exerts promotional effort to further spur consumer demand. We find that quantity discount contracts in conjunction with buy-back achieve supply chain coordination. Successful coordination can result in significant supply chain improvement, which leads the retailer to order more units and exert higher promotional effort level. With numerical examples, we provide additional insights on the conditions for the manufacturer to offer rebates.

Suggested Citation

  • Shilei Yang & Charles L Munson & Bintong Chen & Chunming Shi, 2015. "Coordinating contracts for supply chains that market with mail-in rebates and retailer promotions," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 66(12), pages 2025-2036, December.
    • Handle: RePEc:pal:jorsoc:v:66:y:2015:i:12:p:2025-2036
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    Cited by:

    1. Aika Monden & Yusuke Zennyo, 2022. "Consumer rebates from e‐commerce platforms and multichannel management of third‐party sellers," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(7), pages 3059-3071, October.
    2. Heydari, Jafar & Bineshpour, Pegah & Walther, Grit & Ülkü, M. Ali, 2022. "Reconciling conflict of interests in a green retailing channel with green sales effort," Journal of Retailing and Consumer Services, Elsevier, vol. 64(C).
    3. Hrabec, Dušan & Kučera, Jiří & Martinek, Pavel, 2023. "Marketing effort within the newsvendor problem framework: A systematic review and extensions of demand-effort and cost-effort formulations," International Journal of Production Economics, Elsevier, vol. 257(C).

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