Early sale of seasonal inventory in the newsvendor problem
Moutaz Khouja and
Jing Zhou
IISE Transactions, 2019, vol. 51, issue 6, 672-689
Abstract:
Off-price retailers buy excess inventory from manufacturers and retailers and offer it at discounts to consumers. Off-price retailers want a larger assortment of trendy products, which provides retailers with a way to sell excess inventory. We analyze a supply chain of a manufacturer who sells a product to a retailer. Upon realizing demand, the retailer can sell excess inventory to the off-price retailer. The retailer and off-price retailer have their exclusive consumer segments and share a dual segment. We find that adding the off-price retailer increases the manufacturer’s optimal expected profit. Interestingly, selling inventory to the off-price retailer may decrease or increase the retailer’s optimal expected profit. The retailer’s optimal expected profit increases when the off-price retailer has a large exclusive consumer segment. Also, centralization in a supply chain with an off-price retailer leads to larger increase in the optimal order quantity and expected profit compared with centralization in a supply chain without an off-price retailer. The off-price retailer can be worse-off by having a large consumer segment shared with the retailer. Finally, the effect of the off-price retailer consumer segment demand being a random variable has only a small effect on the order quantity, the wholesale price, and profits.
Date: 2019
References: Add references at CitEc
Citations: View citations in EconPapers (1)
Downloads: (external link)
http://hdl.handle.net/10.1080/24725854.2018.1550824 (text/html)
Access to full text is restricted to subscribers.
Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:taf:uiiexx:v:51:y:2019:i:6:p:672-689
Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/uiie20
DOI: 10.1080/24725854.2018.1550824
Access Statistics for this article
IISE Transactions is currently edited by Jianjun Shi
More articles in IISE Transactions from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().