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Article: Some properties of buyback and other related schemes in a newsvendor-product supply chain with price-sensitive demand

TitleSome properties of buyback and other related schemes in a newsvendor-product supply chain with price-sensitive demand
Authors
KeywordsBuyback
Channel coordination
Newsvendor product
Resale price maintenance
Supply chain
Issue Date2007
PublisherPalgrave Macmillan Ltd. The Journal's web site is located at http://www.palgrave-journals.com/jors/index.html
Citation
Journal Of The Operational Research Society, 2007, v. 58 n. 4, p. 491-504 How to Cite?
AbstractA manufacturer wholesaling to a retailer a 'newsvendor-type' product such as a seasonal/fashion good or a perishable food item is considered here. It is known that such a manufacturer/retailer channel has difficulties in fully realizing the market's profit potential. We study a theoretical construct of such a channel and present practically useful results for a manufacturer trying to design more profitable pricing schemes. Specifically, we consider a 'dominant' manufacturer supplying a newsvendor-type product to a retailer. The retail market volume varies with the unit retail price according to a stochastic demand curve. We study the design and performance of 'price-only', 'buyback' and 'manufacturer-imposed retail price' schemes. All these schemes have been considered in earlier works. The first part of this paper studies some important but previously overlooked aspects of price-only and buyback schemes. We show that the performance of these schemes is strongly and somewhat counter-intuitively affected by the specific form of demand curve and of demand randomization. Thus, we identify hitherto neglected factors that must be carefully considered when designing pricing schemes for actual implementation. The second part of this paper demonstrates the practicality and merit of using buyback in conjunction with a manufacturer-imposed retail price - an arrangement overlooked in the literature because it is widely mistaken as illegal. Overall, the paper shows how a manufacturer can better realize the market's potential by: (i) modifying slightly the well-known buyback arrangement; and (ii) carefully modelling certain hitherto neglected aspects of the price/demand relationship - a conclusion quite contrary to what one might surmise from the current theoretical literature.
Persistent Identifierhttp://hdl.handle.net/10722/85812
ISSN
2015 Impact Factor: 1.225
2015 SCImago Journal Rankings: 1.026
ISI Accession Number ID
References

 

DC FieldValueLanguage
dc.contributor.authorLau, AHLen_HK
dc.contributor.authorLau, HSen_HK
dc.contributor.authorWang, JCen_HK
dc.date.accessioned2010-09-06T09:09:32Z-
dc.date.available2010-09-06T09:09:32Z-
dc.date.issued2007en_HK
dc.identifier.citationJournal Of The Operational Research Society, 2007, v. 58 n. 4, p. 491-504en_HK
dc.identifier.issn0160-5682en_HK
dc.identifier.urihttp://hdl.handle.net/10722/85812-
dc.description.abstractA manufacturer wholesaling to a retailer a 'newsvendor-type' product such as a seasonal/fashion good or a perishable food item is considered here. It is known that such a manufacturer/retailer channel has difficulties in fully realizing the market's profit potential. We study a theoretical construct of such a channel and present practically useful results for a manufacturer trying to design more profitable pricing schemes. Specifically, we consider a 'dominant' manufacturer supplying a newsvendor-type product to a retailer. The retail market volume varies with the unit retail price according to a stochastic demand curve. We study the design and performance of 'price-only', 'buyback' and 'manufacturer-imposed retail price' schemes. All these schemes have been considered in earlier works. The first part of this paper studies some important but previously overlooked aspects of price-only and buyback schemes. We show that the performance of these schemes is strongly and somewhat counter-intuitively affected by the specific form of demand curve and of demand randomization. Thus, we identify hitherto neglected factors that must be carefully considered when designing pricing schemes for actual implementation. The second part of this paper demonstrates the practicality and merit of using buyback in conjunction with a manufacturer-imposed retail price - an arrangement overlooked in the literature because it is widely mistaken as illegal. Overall, the paper shows how a manufacturer can better realize the market's potential by: (i) modifying slightly the well-known buyback arrangement; and (ii) carefully modelling certain hitherto neglected aspects of the price/demand relationship - a conclusion quite contrary to what one might surmise from the current theoretical literature.en_HK
dc.languageengen_HK
dc.publisherPalgrave Macmillan Ltd. The Journal's web site is located at http://www.palgrave-journals.com/jors/index.htmlen_HK
dc.relation.ispartofJournal of the Operational Research Societyen_HK
dc.rightsJournal the of Operational Research Society. Copyright © Palgrave Macmillan Ltd.en_HK
dc.subjectBuybacken_HK
dc.subjectChannel coordinationen_HK
dc.subjectNewsvendor producten_HK
dc.subjectResale price maintenanceen_HK
dc.subjectSupply chainen_HK
dc.titleSome properties of buyback and other related schemes in a newsvendor-product supply chain with price-sensitive demanden_HK
dc.typeArticleen_HK
dc.identifier.openurlhttp://library.hku.hk:4550/resserv?sid=HKU:IR&issn=0160-5682&volume=58&issue=4&spage=491&epage=504&date=2007&atitle=Some+properties+of+buyback+and+other+related+schemes+in+a+newsvendor-product+supply+chain+with+price-sensitive+demanden_HK
dc.identifier.emailLau, AHL: ahlau@business.hku.hken_HK
dc.identifier.emailWang, JC: wangjc@business.hku.hken_HK
dc.identifier.authorityLau, AHL=rp01072en_HK
dc.identifier.authorityWang, JC=rp01107en_HK
dc.description.naturelink_to_subscribed_fulltext-
dc.identifier.doi10.1057/palgrave.jors.2602167en_HK
dc.identifier.scopuseid_2-s2.0-33947389606en_HK
dc.identifier.hkuros137937en_HK
dc.relation.referenceshttp://www.scopus.com/mlt/select.url?eid=2-s2.0-33947389606&selection=ref&src=s&origin=recordpageen_HK
dc.identifier.volume58en_HK
dc.identifier.issue4en_HK
dc.identifier.spage491en_HK
dc.identifier.epage504en_HK
dc.identifier.isiWOS:000245075500009-
dc.publisher.placeUnited Kingdomen_HK
dc.identifier.scopusauthoridLau, AHL=7202626080en_HK
dc.identifier.scopusauthoridLau, HS=36942855500en_HK
dc.identifier.scopusauthoridWang, JC=15838282400en_HK
dc.identifier.citeulike1185115-

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