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Article: Manufacturer's pricing strategy and return policy for a single-period commodity

TitleManufacturer's pricing strategy and return policy for a single-period commodity
Authors
Issue Date1999
PublisherElsevier BV. The Journal's web site is located at http://www.elsevier.com/locate/ejor
Citation
European Journal Of Operational Research, 1999, v. 116 n. 2, p. 291-304 How to Cite?
AbstractThis paper presents a model for designing the pricing and return-credit strategy for a monopolistic manufacturer of single-period commodities. That is, given the unit manufacturing cost and the unit retail sale price, the manufacturer determines: (i) the unit price C to be charged against the retailer; and (ii) the unit credit V to be given to the retailer for units returned. While the manufacturer is allowed to set C and V, the order quantity Q is set by the retailer in response to the manufacturer's C and V. Among the unexpected findings derived from our model are: (i) unless an external force supports the retailer, otherwise the manufacturer can usually design a (C, V)-scheme that gives himself the lion's share of the profit; (ii) depending on the risk attitudes of the manufacturer and the retailer, the optimal return policy can range from 'no returns allowed' to 'unlimited returns with full credit'; (iii) instead of losing his profit share to the retailer, a return-credits agreement can often be manipulated by a shrewd manufacturer to increase his profit.
Persistent Identifierhttp://hdl.handle.net/10722/177928
ISSN
2015 Impact Factor: 2.679
2015 SCImago Journal Rankings: 2.595
ISI Accession Number ID
References

 

DC FieldValueLanguage
dc.contributor.authorLau, HSen_US
dc.contributor.authorLau, AHLen_US
dc.date.accessioned2012-12-19T09:40:52Z-
dc.date.available2012-12-19T09:40:52Z-
dc.date.issued1999en_US
dc.identifier.citationEuropean Journal Of Operational Research, 1999, v. 116 n. 2, p. 291-304en_US
dc.identifier.issn0377-2217en_US
dc.identifier.urihttp://hdl.handle.net/10722/177928-
dc.description.abstractThis paper presents a model for designing the pricing and return-credit strategy for a monopolistic manufacturer of single-period commodities. That is, given the unit manufacturing cost and the unit retail sale price, the manufacturer determines: (i) the unit price C to be charged against the retailer; and (ii) the unit credit V to be given to the retailer for units returned. While the manufacturer is allowed to set C and V, the order quantity Q is set by the retailer in response to the manufacturer's C and V. Among the unexpected findings derived from our model are: (i) unless an external force supports the retailer, otherwise the manufacturer can usually design a (C, V)-scheme that gives himself the lion's share of the profit; (ii) depending on the risk attitudes of the manufacturer and the retailer, the optimal return policy can range from 'no returns allowed' to 'unlimited returns with full credit'; (iii) instead of losing his profit share to the retailer, a return-credits agreement can often be manipulated by a shrewd manufacturer to increase his profit.en_US
dc.languageengen_US
dc.publisherElsevier BV. The Journal's web site is located at http://www.elsevier.com/locate/ejoren_US
dc.relation.ispartofEuropean Journal of Operational Researchen_US
dc.titleManufacturer's pricing strategy and return policy for a single-period commodityen_US
dc.typeArticleen_US
dc.identifier.emailLau, AHL: ahlau@business.hku.hken_US
dc.identifier.authorityLau, AHL=rp01072en_US
dc.description.naturelink_to_subscribed_fulltexten_US
dc.identifier.doi10.1016/S0377-2217(98)00123-4en_US
dc.identifier.scopuseid_2-s2.0-0344672502en_US
dc.relation.referenceshttp://www.scopus.com/mlt/select.url?eid=2-s2.0-0344672502&selection=ref&src=s&origin=recordpageen_US
dc.identifier.volume116en_US
dc.identifier.issue2en_US
dc.identifier.spage291en_US
dc.identifier.epage304en_US
dc.identifier.isiWOS:000080472100006-
dc.publisher.placeNetherlandsen_US
dc.identifier.scopusauthoridLau, HS=7201497264en_US
dc.identifier.scopusauthoridLau, AHL=7202626080en_US

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