Multi-period channel coordination in vendor-managed inventory for deteriorating goods |
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Authors: | Liang-Tu Chen |
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Affiliation: | Department of Commerce Automation and Management , National Pingtung Institute of Commerce , 51 Minsheng E. Rd, Pingtung 900 , Taiwan |
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Abstract: | This study examines the problem of optimally dynamic joint decisions, including replenishment scheduling/quantity, retail price, wholesale price, and revenue-sharing allocation, in a vertically decentralised single-manufacturer Stackelberg and single-retailer channel over a multi-period planning horizon, subject to deteriorating goods and multivariate demand function. This study uses a calculus-based formulation combined with dynamic programming techniques to solve the channel coordination decision problem. Additionally, three arrangements, namely price-only contract, revenue-sharing contract, and revenue-sharing plus linear rebate and side-payment contract for channel coordination, are developed under retailer-managed inventory (RMI) and vendor-managed inventory (VMI) systems, respectively. The analysis reveals that the proposed policy under the VMI system with the revenue-sharing plus linear rebate and side-payment contract tends to obtain low retail prices and large demand quantity, and results in near-perfect coordination, including greater system efficiency and Pareto improvements, for the vertically decentralised dynamic channel. |
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Keywords: | supply chain management vendor managed inventory |
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