Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
1023832 | Transportation Research Part E: Logistics and Transportation Review | 2010 | 13 Pages |
Abstract
This paper deals with the problem of coordinating a vertically separated distribution system under vendor-managed inventory and consignment arrangements. We formulate the profit-maximization problem and carry out equilibrium analysis under cooperative and non-cooperative settings. In addition, a revenue-sharing scheme joint with a side-payment is proposed, which leads to Pareto improvements among channel participants. Our analysis reveals that the non-cooperative decentralization tends to price higher and stock less, which leads to a lower channel-wide profit. The consistent bias can be rectified by the dominant, cooperative wholesaler or by using the proposed two-part revenue-sharing mechanism.
Related Topics
Social Sciences and Humanities
Business, Management and Accounting
Business and International Management
Authors
Jen-Ming Chen, I-Chen Lin, Hung-Liang Cheng,