The pioneering Pasternack returns-policy model analyzed channel coordination with a single supplier catering to a retailer facing stochastic demand for a perishable product with a fixed price, and the model showed that giving partial returns of unsold stock to the retailer is the optimal policy for the entire supply chain. The result thus begs the question as to why manufacturers of perishable commodities widely accept full returns of unsold stock as the norm. We model the environment as one where two capacity-constrained manufacturers compete for shelf space with the same retailer, and we show that a complete-credit returns policy is in fact the only possible equilibrium of the game. Our results obviate the need for knowing the exact functional form of the demand distribution in order to compute the returns credit, as Pasternack's results would require. From a retailer's standpoint, we establish a simple procurement strategy and show that it is optimal. The same game with price-only contracting has a pure-strategy equilibrium when the supplier capacities are below a threshold value and a mixed-strategy equilibrium when the supplier capacities cross this threshold but are still so limited that no single supplier can with certainty supply all the quantity demanded.channel coordination versus channel competition, newsvendor problem, vertical control, returns policies, perishable goods, procurement strategy
Increasing generalized failure rate (IGFR) distributions were introduced as a tool in the study of contracting mechanisms in supply chains. In this note, we compare and contrast the closure-and the lack thereof-of IGFR and increasing failure rate (IFR) distributions with respect to standard operations on random variables. Some implications of these results for the use of IGFR distributions in supply chain models are noted.
Given a sequence of iid demands and an order up to replenishment policy with negligible lead time, we prove that average fill rate is monotonically decreasing in the number of periods in the planning horizon. This was conjectured to be true in a recent issue of this journal.
I nventory pooling is at the root of many celebrated ideas in operations management. Postponement, component commonality, and resource flexibility are some examples. Motivated by our experience in the aftermarket services industry, we propose a model of inventory pooling to meet differentiated service levels for multiple customers. Our central research question is the following: What are the minimum inventory level and optimal allocation policy when a pool of inventory is used in a single period to satisfy individual service levels for multiple customers? We measure service by the probability of fulfilling a customer's entire demand immediately from stock. We characterize the optimal solution in several allocation policy classes; provide some structural results, formulas, and bounds; and also make detailed interpolicy comparisons. We show that the pooling benefit is always strictly positive, even when there are an arbitrary number of customers with perfectly positively correlated demands.
The problem of designing a contract mechanism to allocate the component subprojects of a large project to a pool of contractors has important implications for project success. Our research analytically addresses issues involved in diversifying risk for the project owner by partitioning the project and assigning the subprojects to multiple contractors whose performance characteristics are imperfectly known. We begin by giving a precise analytical treatment of the effect of activity variance on expected project duration, characterizing the cases when an increase in activity variance pushes up the expected project duration. In the case of a homogeneous project consisting of serial subprojects, we show that disaggregating the project and assigning the subprojects to the contractors on a piecemeal basis reduces variance of project duration while leaving the mean unchanged. On the other hand, in the case of a homogeneous project consisting of parallel subprojects, aggregating the subprojects and assigning the aggregated project to one of the contractors reduces mean project duration.
scite is a Brooklyn-based organization that helps researchers better discover and understand research articles through Smart Citations–citations that display the context of the citation and describe whether the article provides supporting or contrasting evidence. scite is used by students and researchers from around the world and is funded in part by the National Science Foundation and the National Institute on Drug Abuse of the National Institutes of Health.
hi@scite.ai
10624 S. Eastern Ave., Ste. A-614
Henderson, NV 89052, USA
Copyright © 2024 scite LLC. All rights reserved.
Made with 💙 for researchers
Part of the Research Solutions Family.