Returns with wholesale-price-discount contract in a newsvendor problem

Jing Chen

International Journal of Production Economics, 2011, vol. 130, issue 1, 104-111

Abstract: We consider a newsvendor problem in a supply chain that consists of a manufacturer and a retailer. The manufacturer is the Stackelberg leader and the retailer is the follower. We examine how the manufacturer can contract a wholesale-price-only agreement with its retailer that maximizes its profit. We also propose a returns policy with a wholesale-price-discount scheme (returns-discount contract) that can achieve supply chain coordination. Using the wholesale price only contract as a benchmark, we show how the manufacturer sets a discounted wholesale price in a returns-discount contract that enhances both profits of the manufacturer and the retailer, as well as improves the supply chain efficiency.

Keywords: Pricing; Newsvendor; problem; Returns; policy; Supply; chain; coordination; Demand; uncertainty (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (17)

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