Article

Effects of promotion cost sharing policy with the sales learning curve on supply chain coordination

Computers & Operations Research (Impact Factor: 1.86). 08/2012; 39(8):1872-1878. DOI: 10.1016/j.cor.2011.07.009
Source: DBLP

ABSTRACT

Promotional activity has become increasingly more common in the service industry. This research considers a two-echelon multiple-retailer distribution channel under retailers’ promotional efforts and the sales learning curve. The competition between retailers arises from substitution effect due to shortages. This paper incorporates the idea of the sales learning curve into the promotion cost. The objective is to solve the retailers’ promotion and replenishment decisions under retailer competition and promotional effort with the sales learning curve. The current study considers promotion cost sharing as a mechanism to achieve coordination. The model shows that keeping the fractions of promotion cost sharing within an appropriate range increases profits for all parties. This work also discusses how retailer competition and the sales learning curve affect channel decisions and profits. Concepts from retailer competition and the sales learning curve, along with numerical studies on a few interesting cases help deliver several important managerial insights. These results should be a useful reference for managerial decisions and administrations.

0 Followers
 · 
19 Reads
  • Source
    • "Demand function is another main criterion of mathematical formulation. Concerning the mathematical modeling of advertising costs, it is obvious that a linear integration is generally used in terms of advertising expenditures ([34], and [37]), while non-linear advertising expenditures are rare ([11], [25], and [41]). These articles studied cooperative advertising in a two-echelon supply chain, as well. "
    Dataset: pdfs

    Full-text · Dataset · Sep 2015
  • Source
    • "Demand function is another main criterion of mathematical formulation. Concerning the mathematical modeling of advertising costs, it is obvious that a linear integration is generally used in terms of advertising expenditures ([34], and [37]), while non-linear advertising expenditures are rare ([11], [25], and [41]). These articles studied cooperative advertising in a two-echelon supply chain, as well. "
    [Show abstract] [Hide abstract]
    ABSTRACT: Supply chain members coordinate with each other in order to obtain more profit. The major mechanisms for coordination among supply chain echelons are pricing, inventory management, and ordering decisions. Regarding to these mechanisms, supply chain participants have conflicts of interest. This paper concerns coordination of enterprise decisions including pricing, advertising, ordering, and inventory decisions in a multi-echelon supply chain consisting of multiple suppliers, one manufacturer, and multiple retailers. In the current study, a novel inventory model is presented for both the manufacturer, and the retailers who are able to determine the number of orders for each product. Moreover, each supply chain member has equal power and make their decisions simultaneously. The proposed model considers the relationships among three echelon supply chain members based on a non-cooperative Nash game with pricing and inventory decisions. An iterative solution algorithm is proposed to find Nash equilibrium point of the game. Several numerical examples are presented to study the application of the model as well as the effectiveness of the algorithm. Finally, a comprehensive sensitivity analysis is performed and some important managerial insights are highlighted.
    Full-text · Article · Apr 2015 · Journal of Industrial and Management Optimization
  • Source
    • "They find that appropriate returns policy with sales rebate and penalty contract can properly coordinate the supply chain and lead to a win–win situation for all SC members. Tsao and Sheen (2012) deem promotion cost sharing as a critical mechanism to coordinate the supply chain. Xing and Liu (2012) examine an online retailer's promotional activity. "
    [Show abstract] [Hide abstract]
    ABSTRACT: This paper investigates the issue of channel coordination for a two-stage supply chain with one retailer and one manufacturer. The demand is influenced by the retailer's sales effort and manufacturer's quality improvement efforts. We found that using the traditional two-part tariff contract alone cannot coordinate the supply chain well. Joining the two-part tariff contract with the quality effort cost sharing model remains ineffective in managing the two-stage supply chain. To effectively coordinate the channel members, we propose an innovative supply chain contract that integrates the endeavors of the manufacturer and the retailer. We identify the optimal level of retail sales effort, optimal level of quality-improvement effort and optimal supply chain profit. Sensitivity analyses are conducted to examine the impacts of changes in the costs of sales effort and quality effort on the performance of the supply chain.
    Full-text · Article · Dec 2013 · International Journal of Production Economics
Show more