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Journal ArticleDOI

Coordination in a distribution channel with decisions on the nature of incentives and share-dependency on pricing

15 Aug 2016-Journal of the Operational Research Society (Taylor & Francis)-Vol. 67, Iss: 8, pp 1034-1049
TL;DR: The findings suggest that the manufacturer is always economically better-off through coordination, independent of the mechanism the channel uses, and the retailer is better-offs with a share-dependent-pricing mechanism with the share set ex-post.
Abstract: We research the most suitable coordination mechanism for a distribution channel that is composed of one manufacturer and one retailer. Coordination is sought through a Revenue Sharing Contract (RSC...
Citations
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Journal ArticleDOI
TL;DR: This paper identifies the conditions and the stochastic cases in which the blockchain is not worth implementing and investigates the suitability of a smart wholesale price contract and a smart revenue sharing contract to better coordinate firms’ relationships and negotiations.

145 citations

Journal ArticleDOI
TL;DR: In this article, the authors proposed a hybrid model by IVIF (interval-valued intuitionistic fuzzy) DEMATEL (decision making trial and evaluation laboratory) and IVIF MOORA (Multi-Objective Optimization by Ratio Analysis) respectively.
Abstract: This study aims to analyze the innovation strategies for the green supply chain management with QFD (quality function deployment) multidimensionally. The novelty of the study is to define the criteria of green supply chain for each stage of QFD and propose a hybrid model by IVIF (interval-valued intuitionistic fuzzy) DEMATEL (decision making trial and evaluation laboratory) and IVIF MOORA (Multi-Objective Optimization by Ratio Analysis) respectively. The results demonstrate that understanding the customer expectations with customer relation management is the most important innovation strategy for the green supply chain management in energy industry with the consecutive stages of QFD whereas benchmarking the competitive market environment has relatively the last seat in the ranking. Hence, it is recommended that energy companies should have an effective customer relationship management. In this context, these companies should make a detailed analysis to learn what their customers directly expect from them. With the help of this issue, these companies should generate their product and services based on these expectations. Additionally, it is also stated that new service and product development is also essential for energy companies to improve their innovativeness. For this purpose, a research and development department should be created, and the qualified people should be employed. Additionally, different opinions should be collected from various parties, such as customers, employees, and suppliers. Since customers who are satisfied will prefer these companies, the energy companies can catch the opportunity to increase their market share.

134 citations

Journal ArticleDOI
TL;DR: In this paper, the impact of a process innovation strategy that firms implement through Industry 4.0 (I4.0) technologies on lean practices and green supply chains is investigated, and the results reveal that Leanness facilitates the supplier collaboration on environmental programs and positively contributes to environmental and operational performance.

80 citations

Journal ArticleDOI
TL;DR: It is found that an endogenous incentive is never more economically and environmentally convenient than a no-incentive game and an exogenous incentive can make both players economically better-off inside specific sharing parameter ranges.
Abstract: A closed-loop supply chain seeks to enhance the consumers’ environmental consciousness to increase both the profits and the return of past-sold products. Even though, firms have misaligned interests for closing the loop: while all firms exploit consumers environmental consciousness to increase sales, only manufacturers use it for appropriating of returns’ residual value. Starting from a benchmark (no-incentive) scenario where a manufacturer (M) is the leader and a retailer (R) is the follower, we develop two incentive games through a profit-sharing contract to align firms’ motivations for closing the loop. In both incentive games, the incentive takes the form of a share of profits that M transfers to R. Our question is how the sharing fraction should be determined to make both players economically better-off. The first incentive game assumes that R has no-information on the sharing parameter, which is determined by M after R sets her strategies; thus the incentive has an endogenous nature. In the second incentive game the sharing parameter is common knowledge and both players know its values before the game starts, thus the incentive has an exogenous nature. We find that an endogenous incentive is never more economically and environmentally convenient than a no-incentive game. In contrast, an exogenous incentive can make both players economically better-off inside specific sharing parameter ranges. Nevertheless, when other forces (e.g., competition or legislation) impose the adoption of a profit-sharing contract, M should supply an endogenous incentive when the exogenous share is either too high or too low.

67 citations

Journal ArticleDOI
TL;DR: The main results show that cooperative advertising programs can be very difficult to implement in a supply chain undertaking a VMI policy with a consignment contract, in which operations and marketing interface is taken into account.

57 citations

References
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Book ChapterDOI
TL;DR: This chapter extends the newsvendor model by allowing the retailer to choose the retail price in addition to the stocking quantity, and discusses an infinite horizon stochastic demand model in which the retailer receives replenishments from a supplier after a constant lead time.
Abstract: Publisher Summary This chapter reviews the supply chain coordination with contracts. Numerous supply chain models are discussed. In each model, the supply chain optimal actions are identified. The chapter extends the newsvendor model by allowing the retailer to choose the retail price in addition to the stocking quantity. Coordination is more complex in this setting because the incentives provided to align one action might cause distortions with the other action. The newsvendor model is also extended by allowing the retailer to exert costly effort to increase demand. Coordination is challenging because the retailer's effort is noncontractible—that is, the firms cannot write contracts based on the effort chosen. The chapter also discusses an infinite horizon stochastic demand model in which the retailer receives replenishments from a supplier after a constant lead time. Coordination requires that the retailer chooses a large basestock level.

2,626 citations

Journal ArticleDOI
TL;DR: Several limitations of revenue sharing are identified to (at least partially) explain why it is not prevalent in all industries, including cases in which revenue sharing provides only a small improvement over the administratively cheaper wholesale price contract.
Abstract: Under a revenue-sharing contract, a retailer pays a supplier a wholesale price for each unit purchased, plus a percentage of the revenue the retailer generates. Such contracts have become more prevalent in the videocassette rental industry relative to the more conventional wholesale price contract. This paper studies revenue-sharing contracts in a general supply chain model with revenues determined by each retailer's purchase quantity and price. Demand can be deterministic or stochastic and revenue is generated either from rentals or outright sales. Our model includes the case of a supplier selling to a classical fixed-price newsvendor or a price-setting newsvendor. We demonstrate that revenue sharing coordinates a supply chain with a single retailer (i.e., the retailer chooses optimal price and quantity) and arbitrarily allocates the supply chain's profit. We compare revenue sharing to a number of other supply chain contracts (e.g., buy-back contracts, price-discount contracts, quantity-flexibility contracts, sales-rebate contracts, franchise contracts, and quantity discounts). We find that revenue sharing is equivalent to buybacks in the newsvendor case and equivalent to price discounts in the price-setting newsvendor case. Revenue sharing also coordinates a supply chain with retailers competing in quantities, e.g., Cournot competitors or competing newsvendors with fixed prices. Despite its numerous merits, we identify several limitations of revenue sharing to (at least partially) explain why it is not prevalent in all industries. In particular, we characterize cases in which revenue sharing provides only a small improvement over the administratively cheaper wholesale price contract. Additionally, revenue sharing does not coordinate a supply chain with demand that depends on costly retail effort. We develop a variation on revenue sharing for this setting.

2,271 citations

Journal ArticleDOI
TL;DR: In this article, the authors show that the United States Supreme Court is mistaken in its implied assumption respecting the influence of integration upon competition and that vertical integration may not, as such, serve to reduce competition and may, if the economy is already ridden by deviations from competition, operate to intensify competition.
Abstract: RECENT decisions suggest that the United States Supreme Court is beginning to look upon integration as illegal per se, under the antitrust laws. It may be presumed, in so far as this inference is valid, that the Court believes that integration necessarily reduces competition "unreasonably."2 No sharp distinction is made by the Court between vertical and horizontal integration. It is the purpose of this note to show that the Court is mistaken in its implied assumption respecting the influence of integration upon competition. Horizontal integration may, and frequently does, make for higher prices and a less satisfactory allocation of resources than does pure or workable competition. Vertical integration, on the contrary, does not, as such, serve to reduce competition and may, if the economy is already ridden by deviations from competition, operate to intensify competition. My argument will be confined largely to this last proposition.

1,562 citations

Journal ArticleDOI
TL;DR: It’s time to get used to the idea that the world doesn’t need to know everything about you.
Abstract: A channel of distribution consists of different channel members each having his own decision variables. However, each channel member's decisions do affect the other channel members' profits and, as a consequence, actions. A lack of coordination of these decisions can lead to undesirable consequences. For example, in the simple manufacturer-retailer-consumer channel, uncoordinated and independent channel members' decisions over margins result in a higher price paid by the consumer than if those decisions were coordinated. In addition, the ensuing suboptimal volume leads to lower profits for both the manufacturer and the retailer. This paper explores the problems inherent in channel coordination. We address the following questions. ---What is the effect of channel coordination? ---What causes a lack of coordination in the channel? ---How difficult is it to achieve channel coordination? ---What mechanisms exist which can achieve channel coordination? ---What are the strengths and weaknesses of these mechanism? ---What is the role of nonprice variables (e.g., manufacturer advertising, retailer shelf-space) in coordination? ---Does the lack of coordination affect normative implications from in-store experimentation? ---Can quantity discounts be a coordination mechanism? ---Are some marketing practices actually disguised quantity discounts? We review the literature and present a simple formulation illustrating the roots of the coordination problem. We then derive the form of the quantity discount schedule that results in optimum channel profits. This article was originally published in Marketing Science, Volume 2, Issue 3, pages 239--272, in 1983.

1,102 citations

Journal ArticleDOI
TL;DR: In this article, the influence of channel structures and channel coordination on the supplier, the retailer, and the entire supply chain in the context of two single-channel and two dual-channel supply chains was investigated.

509 citations