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Selected AbstractsChannel Coordination for a Supply Chain with a Risk-Neutral Manufacturer and a Loss-Averse Retailer,DECISION SCIENCES, Issue 3 2007Charles X. Wang ABSTRACT This articles considers a decentralized supply chain in which a single manufacturer is selling a perishable product to a single retailer facing uncertain demand. It differs from traditional supply chain contract models in two ways. First, while traditional supply chain models are based on risk neutrality, this article takes the viewpoint of behavioral principal,agency theory and assumes the manufacturer is risk neutral and the retailer is loss averse. Second, while gain/loss (GL) sharing is common in practice, there is a lack of analysis of GL-sharing contracts in the supply chain contract literature. This article investigates the role of a GL-sharing provision for mitigating the loss-aversion effect, which drives down the retailer order quantity and total supply chain profit. We analyze contracts that include GL-sharing-and-buyback (GLB) credit provisions as well as the special cases of GL contracts and buyback contracts. Our analytical and numerical results lend insight into how a manufacturer can design a contract to improve total supply chain, manufacturer, and retailer performance. In particular, we show that there exists a special class of distribution-free GLB contracts that can coordinate the supply chain and arbitrarily allocate the expected supply chain profit between the manufacturer and retailer; in contrast with other contracts, the parameter values for contracts in this class do not depend on the probability distribution of market demand. This feature is meaningful in practice because (i) the probability distribution of demand faced by a retailer is typically unknown by the manufacturer and (ii) a manufacturer can offer the same contract to multiple noncompeting retailers that differ by demand distribution and still coordinate the supply chains. [source] Small Retailer and Service Company Accuracy in Evaluating the Legality of Specified PracticesJOURNAL OF SMALL BUSINESS MANAGEMENT, Issue 4 2001Robin T. Peterson This study examined the degree to which small retail and service company managers were familiar with important federal laws. Further, it assessed differences between these two types of firms in managerial cognizance of the regulations. The findings revealed reasonable knowledge of the federal restrictions, accompanied by some important inaccuracies. Generally, small retail managers were found to be more knowledgeable than small service company managers. [source] Optimal Control of Selling Channels for an Online Retailer with Cost-per-Click Payments and Seasonal ProductsPRODUCTION AND OPERATIONS MANAGEMENT, Issue 3 2007Frank Y. Chen The problem studied in this paper is a predigestion of the decision faced by online retailers (etailers) that advertise on publisher or comparison-shopping websites. An etailer may sell its product not only through its online and bricks-and-mortar stores, but also through the websites of one or more third parties (e.g., Yahoo.com). However, the etailer has to pay a certain amount to such third parties in an action-based payment scheme, such as a cost-per-click (CPC) scheme. Under the CPC scheme, payment is based solely on click-throughs, which means that the etailer pays only when a shopper clicks through to the product page of its website. Only a fraction of such clicks lead to actual sales. The extra cost that is associated with shoppers who first click through to the third-party websites makes them less attractive as customers than those who directly visit the etailer's online store. Moreover, the CPC rate for a prominent placement is normally set by competitive bidding, and thus varies over time. Therefore, the etailer needs to decide dynamically whether or not to list on a third-party website. The structural properties of the optimal policy are discussed, and numerical examples are given to show the revenue impact of dynamic listing control. [source] The Strategic Localization of Transnational Retailers: The Case of Samsung-Tesco in South KoreaECONOMIC GEOGRAPHY, Issue 1 2006Neil M. Coe Abstract: This article contributes to the small but growing geographic literature on the internationalization of retailing by exploring the strategic localization of transnational retailers. While it has long been recognized that firms in many different sectors localize their activities to meet the requirements of different national and local markets, the imperative is particularly strong for retail transnational corporations (TNCs) because of the extremely high territorial embeddedness of their activities. This embeddedness can be seen through the ways in which retailers seek to establish and maintain extensive store networks, adapt their offerings to various cultures of consumption, and manage the proliferation of connections to the local supply base. We illustrate these conceptual arguments through a case study of the Samsung-Tesco joint venture in South Korea, profiling three particular aspects of Samsung-Tesco's strategic localization: the localization of products, the localization of sourcing, and the localization of staffing and strategic decision making. In conclusion, we argue that the strategic localization of transnational retailers needs to be conceptualized as a dynamic that evolves over time after initial inward investment and that localization should be seen as a two-way dynamic that has the potential to have a wider impact on the parent corporation. [source] Associations between demographics and perceptions of unethical consumer behaviourINTERNATIONAL JOURNAL OF CONSUMER STUDIES, Issue 2 2003Karen S. Callen Abstract Retailers may lose profits as a result of shoplifting and other unethical consumer behaviour. Research focusing on consumer ethical decision making is needed. Information provided by 1117 undergraduate students from universities within the US revealed that women are less accepting of unethical consumer behaviour than men. Subjects who reported that they very consistently follow the teachings of their primary faith are less accepting of unethical consumer behaviour than subjects who reported that they do not very consistently follow the teachings of their primary faith. Relationships between consumer ethical response scores and other demographic characteristics are discussed. [source] The Role of Debt Purchases in Takeovers: A Tale of Two RetailersJOURNAL OF ECONOMICS & MANAGEMENT STRATEGY, Issue 3 2006Thomas H. Noe In this paper, we examine acquisitions of two financially distressed retailers,Federated's takeover of Macy's, and Zell Chilmark's takeover of Carter Hawley Hale. In both cases the raider purchased some of the target's outstanding debt to launch its takeover attempt. These debt purchases appear to have been facilitated by two salient factors,the raider's expertise in dealing with distressed firm restructuring and the ability of the raider to acquire a large blockholding of debt. Our analysis indicates that, when these factors are present, it is optimal for a raider to initiate a takeover of a distressed firm through purchasing a block of the firm's debt. Target bondholder reaction will be favorable whereas shareholder reaction may be either favorable or unfavorable. [source] Competitiveness and consumer preferences of U.S. fruits in TaiwanAGRIBUSINESS : AN INTERNATIONAL JOURNAL, Issue 4 2004Jane Lu Hsu This study utilizes the source,position,performance framework to examine the competitiveness and consumer preferences of U.S. fruits versus Taiwanese fruits in the local markets based on the views of retailers and consumers. Retailers who sell relatively more U.S. fresh fruits over total values of fruit sales favor the characteristics of U.S. fresh fruits. Consumers do not value the relative importance of characteristics of U.S. fresh fruits as much as retailers do. Strategic marketing plans need to be designed for both retailers and consumers to strengthen the acceptance of U.S. fresh fruits. A well-balanced promotion strategy emphasizing the overall superiority of profit-driven characteristics of U.S. fruits may encourage retailers to sell more U.S. fresh fruits. Highlighting information related to price and freshness of U.S. fruits may stimulate consumers to purchase more U.S. fresh fruits. [EconLit citations: M310, Q130.] © 2004 Wiley Periodicals, Inc. Agribusiness 20: 433,448, 2004. [source] Multinational Retailers in China: Proliferating ,McJobs' or Developing Skills?*JOURNAL OF MANAGEMENT STUDIES, Issue 7 2006Jos Gamble abstract Much has been written on the nature of skills and the extent to which there is increased skills development or a deskilling of workers in modern workplaces. This paper broadens the debate and explores these issues in the novel context of UK- and Japanese- invested retailers' operations in China. Data derived from over two hundred interviews at twelve retail stores in six Chinese cities and questionnaires completed by almost eight hundred employees elicited contextualized accounts of interactive service workers' own perceptions of their training and skills development. It was found that these firms made a substantial contribution to skills development, fostered and enhanced both directly by company training and also through experiential workplace-based learning. It might be, however, that this constitutes an essential but ,one-off' increase in skills in transitional economies such as that of China. [source] Retailers' tagging practices: a potential liability?PACKAGING TECHNOLOGY AND SCIENCE, Issue 1 2004Laura Bix Abstract This study investigates the coverage of federally mandated information on over-the-counter (OTC) drug labels by electronic article surveillance (EAS) tags applied to the exterior of cartons. Using adult-strength analgesics containing acetaminophen as a case study, researchers investigated the issue in Houston, Texas (24 stores) and Lansing, Michigan (33 stores). The information obscured by EAS tags was identified and classified for a total of 849 packages using a standardized data collection instrument. The results indicated that 293 packages examined, or 34.5%, had information mandated by the US Food and Drug Administration (US FDA) fully or partially obscured by the EAS tags. Retailers and manufacturers should be aware of such practices to reduce potential liability. Recommendations for improving EAS tag usage on OTC products are presented. Copyright © 2004 John Wiley & Sons, Ltd. [source] Supply Chain Conflict Due to Store Brands: The Value of Wholesale Price Commitment in a Retail Supply Chain,DECISION SCIENCES, Issue 2 2010Ana Groznik ABSTRACT Store brands are of increasing importance in retail supply chains, often causing channel conflict, as the retailer's product directly competes with the manufacturer's national brand. Extant research on the resulting channel interactions either assumes the national brand manufacturer can credibly commit to maintaining a wholesale price or that he lacks such ability. However, these two scenarios imply very different supply chain interactions, as only a national brand manufacturer with commitment ability can strategically adjust a national brand wholesale price to prevent a store brand introduction by the retailer. We specifically analyze the impact of this assumption on the manufacturer, the retailer, and the customers. We determine when long-term contracts that provide the manufacturer with such commitment ability can improve supply chain profitability. [source] Channel Coordination for a Supply Chain with a Risk-Neutral Manufacturer and a Loss-Averse Retailer,DECISION SCIENCES, Issue 3 2007Charles X. Wang ABSTRACT This articles considers a decentralized supply chain in which a single manufacturer is selling a perishable product to a single retailer facing uncertain demand. It differs from traditional supply chain contract models in two ways. First, while traditional supply chain models are based on risk neutrality, this article takes the viewpoint of behavioral principal,agency theory and assumes the manufacturer is risk neutral and the retailer is loss averse. Second, while gain/loss (GL) sharing is common in practice, there is a lack of analysis of GL-sharing contracts in the supply chain contract literature. This article investigates the role of a GL-sharing provision for mitigating the loss-aversion effect, which drives down the retailer order quantity and total supply chain profit. We analyze contracts that include GL-sharing-and-buyback (GLB) credit provisions as well as the special cases of GL contracts and buyback contracts. Our analytical and numerical results lend insight into how a manufacturer can design a contract to improve total supply chain, manufacturer, and retailer performance. In particular, we show that there exists a special class of distribution-free GLB contracts that can coordinate the supply chain and arbitrarily allocate the expected supply chain profit between the manufacturer and retailer; in contrast with other contracts, the parameter values for contracts in this class do not depend on the probability distribution of market demand. This feature is meaningful in practice because (i) the probability distribution of demand faced by a retailer is typically unknown by the manufacturer and (ii) a manufacturer can offer the same contract to multiple noncompeting retailers that differ by demand distribution and still coordinate the supply chains. [source] Retailer's Response to Alternate Manufacturer's Incentives Under a Single-Period, Price-Dependent, Stochastic-Demand Framework,DECISION SCIENCES, Issue 4 2005F. J. Arcelus ABSTRACT This article considers the joint development of the optimal pricing and ordering policies of a profit-maximizing retailer, faced with (i) a manufacturer trade incentive in the form of a price discount for itself or a rebate directly to the end customer; (ii) a stochastic consumer demand dependent upon the magnitude of the selling price and of the trade incentive, that is contrasted with a riskless demand, which is the expected value of the stochastic demand; and (iii) a single-period newsvendor-type framework. Additional analysis includes the development of equal profit policies in either form of trade incentive, an assessment of the conditions under which a one-dollar discount is more profitable than a one-dollar rebate, and an evaluation of the impact upon the retailer-expected profits of changes in either incentive or in the degree of demand uncertainty. A numerical example highlights the main features of the model. The analytical and numerical results clearly show that, as compared to the results for the riskless demand, dealing with uncertainty through a stochastic demand leads to (i) (lower) higher retail prices if additive (multiplicative) error, (ii) lower (higher) pass throughs if additive (multiplicative) error, (iii) higher claw backs in both error structures wherever applicable, and (iv) higher rebates to achieve equivalent profits in both error structures. [source] The Impact of Forecast Errors on Early Order Commitment in a Supply Chain,DECISION SCIENCES, Issue 2 2002Xiande Zhao ABSTRACT Supply chain partnership involves mutual commitments among participating firms. One example is early order commitment, wherein a retailer commits to purchase a fixed-order quantity and delivery time from a supplier before the real need takes place. This paper explores the value of practicing early order commitment in the supply chain. We investigate the complex interactions between early order commitment and forecast errors by simulating a supply chain with one capacitated supplier and multiple retailers under demand uncertainty. We found that practicing early order commitment can generate significant savings in the supply chain, but the benefits are only valid within a range of order commitment periods. Different components of forecast errors have different cost implications to the supplier and the retailers. The presence of trend in the demand increases the total supply chain cost, but makes early order commitment more appealing. The more retailers sharing the same supplier, the more valuable for the supply chain to practice early order commitment. Except in cases where little capacity cushion is available, our findings are relatively consistent in the environments where cost structure, number of retailers, capacity utilization, and capacity policy are varied. [source] The New Design Imperative: To Satisfy and DelightDESIGN MANAGEMENT REVIEW, Issue 1 2009Jo Davison Vice President-Creative Websites are corporate resources. Jo Davison's insights have to do with making them resources that generate real value in terms of brand, customer relationships, and sales. Design is the key to achieving these goals and, with illustrations from an industrial products company, a retailer, and a professional services firm, Davison details the elements of sites that are approachable, beautiful, and hard-working. [source] American Eagle Outfitters creates a branded intranet that unites its associatesGLOBAL BUSINESS AND ORGANIZATIONAL EXCELLENCE, Issue 2 2010Richard Borden This trend-leading specialty retailer has produced a branded, popular platform for internal communications to link its rapidly growing roster of associates and locations. Employee-generated content reflects the fresh, fun culture and brands of American Eagle Outfitters, while a user-friendly content management system, with appropriate checkpoints, enables contributors with no information technology experience to post and refresh information quickly. The author discusses some of the intranet's key features; its network of news agents across the company; and the challenges of meeting the internal communication needs of an expanding business with a young workforce whose expectations for immediacy of information are driven by the latest communication and Internet technologies. © 2010 Wiley Periodicals, Inc. [source] Fuzzy-logic-based decision-making system for stock allocation in a distribution supply chainINTELLIGENT SYSTEMS IN ACCOUNTING, FINANCE & MANAGEMENT, Issue 1-2 2006Ying Xie Stock allocation in a distribution supply chain (DSC) means that the warehouse has to determine quantities of the available stock to be delivered to each retailer. Different allocation rules have been developed with various aims. In this paper, a new fuzzy-logic-based decision-making system for stock allocation (DMS_SA) is presented, and the objective is to achieve the target DSC fill rate whilst incurring an acceptable total holding cost, or to achieve the target holding cost whilst with a certain level of fill rate. It is shown how DMS_SA can be extended to be applied to a multi-echelon DSC. Copyright © 2007 John Wiley & Sons, Ltd. [source] Personal mobility support in future service architecturesINTERNATIONAL JOURNAL OF COMMUNICATION SYSTEMS, Issue 9 2001P. P. Demestichas Abstract Support for personal mobility will be among the key factors for success in the competitive communications market of the future. This paper proposes enhancements to the personal mobility support capabilities of service architectures. The TINA service architecture is used as a reference, even though our approach is applicable to other models as well. Our starting point is a business case that falls into the realm of personal mobility. The aim of the business case is to enable users that are found outside their home domain to access services by choosing the best visited retailer, i.e. the one offering adequate quality services in the most cost-efficient manner. In the sequel the following key issues are addressed. First, the introduction of the additional functionality that is required for supporting the business case, and the realisation through appropriate service components. Second, the integration of the new service components in the standard TINA service architecture. Third, the detailed description of a version of the logic of the new components. In this last respect, we formally state, mathematically formulate and solve problems related to the visited retailer selection. Copyright © 2001 John Wiley & Sons, Ltd. [source] Nonfinancial Performance Measures and Promotion-Based IncentivesJOURNAL OF ACCOUNTING RESEARCH, Issue 2 2008DENNIS CAMPBELL ABSTRACT In this paper, I examine the sensitivity of promotion and demotion decisions for lower-level managers to financial and nonfinancial measures of their performance and investigate the extent to which the behavior of lower-level managers reflects promotion-based incentives. Additionally, I test for learning versus effort-allocation effects of promotion-based incentives. I find that promotion and demotion decisions for store managers of a major U.S.-based fast-food retailer (QSR) are sensitive to nonfinancial performance measures of service quality and employee retention after controlling for financial performance. The likelihood of demotion in this organization is also sensitive to nonfinancial performance on the dimension of service quality, while the probability of exit is primarily sensitive to financial performance measures rather than nonfinancial performance measures. I also find evidence that the behavior of lower-level managers is consistent with the incentives created by the weighting of nonfinancial performance measures in promotion decisions. Managers in locations where there is a higher ex ante probability of promotion and a higher potential reward upon promotion demonstrate significantly higher levels and rates of performance improvement in service quality. Finally, consistent with promotion-based incentives inducing both effort-allocation and learning effects, I find that performance-improvement rates for service quality: (1) are higher in prepromotion periods in markets where promotions occur, (2) decrease immediately after the occurrence of a promotion in the same market area, and (3) remain higher than in markets where promotions do not occur. These findings provide some of the first empirical evidence on an alternative to the explicit weighting of nonfinancial metrics in compensation contracts as a mechanism for generating improvements in nonfinancial dimensions of performance. [source] Market-Share Contracts with Asymmetric InformationJOURNAL OF ECONOMICS & MANAGEMENT STRATEGY, Issue 2 2009Adrian Majumdar In this paper, a dominant firm and competitive fringe supply substitute goods to a retailer who has private information about demand. We show that it is profitable for the dominant firm to condition payment on how much the retailer buys from the fringe (market-share contracts). The dominant firm thereby creates countervailing incentives for the retailer and, in some cases, is able to obtain the full-information outcome (unlike in standard screening models, where the agent earns an information rent in the high-demand state and output is distorted in the low-demand state). Our results have implications for fidelity rebates, all-units discounts, and competition policy. Although some crowding out of the fringe may occur when demand is low, we show that market-share contracts need not be harmful for welfare. [source] An empirical investigation of Wal-Mart's expansion into food retailingAGRIBUSINESS : AN INTERNATIONAL JOURNAL, Issue 2 2010Alessandro Bonanno After revolutionizing the concept of mass merchandising with its Discount Stores, Wal-Mart has entered food retailing with its Supercenters, and has become the largest food retailer in the United States. Despite its relevance, little empirical research has focused on explaining the company's entry and expansion into food retailing. Wal-Mart's expansion into food retailing through its store conversion strategy is analyzed using an industrial organization entry framework. The results show that Wal-Mart's store conversion strategy has targeted largely populated areas with low population density, a high percentage of population receiving food stamps, and where the presence of incumbents is modest. The results also provide evidence that as the company moves toward saturation of local markets and increases store conversion rates, it may be forced to reconsider some of its strategic decisions based on the exploitation of economies of density and store conversion. © 2010 Wiley Periodicals, Inc. [source] Applying marketing channel theory to food marketing in developing countries: Vertical disintegration model for horticultural marketing channels in kenyaAGRIBUSINESS : AN INTERNATIONAL JOURNAL, Issue 2 2001Tjalling Dijkstra This article shows that marketing channel theory, which has been extensively applied in developed countries, can also be of great value to the developing world. Notably, the channel approach makes it possible to explain the number of trade levels observed in food marketing systems. We propose here a vertical disintegration model for horticultural marketing channels in Kenya. It contains one dependent variable (the degree of vertical disintegration of a channel) and five independent variables (the population size of the market center served by the channel, the population density of the rural hinterland of that market center, the transport time from farm to market center, the turnover of the retailer involved, and the keeping quality of the commodity traded). Binomial and multinomial logit analyses show that the probability of encountering a more disintegrated horticultural marketing channel increases when the market center has more inhabitants, when the center's rural hinterland is more densely populated, and when the transport to the center takes more time. The probability of encountering a less disintegrated channel increases when the retailer in the channel has a larger turnover and when the traded commodity is a leafy vegetable. [EconLit classification: L190 market structure) © 2001 John Wiley & Sons, Inc. [source] Merging with a buyer group memberMANAGERIAL AND DECISION ECONOMICS, Issue 7 2009Can Erutku We examine a merger between a national retailer and a local retailer who is a member of a buyer group. While the traditional literature on mergers assumes an oligopolistic industry (where the merger takes place) supplied by a perfectly competitive one, we assume here that retailers obtain their input from a supplier that can offer quantity discounts. In this setting, a merger can be profitable for insiders (solving the merger paradox) and can also be more profitable for insiders than for outsiders (solving the free-riding problem). This result holds even if the merged firm ends-up with a small share of the market. However, welfare decreases post-merger. Copyright © 2009 John Wiley & Sons, Ltd. [source] Strategic inventory in capacitated supply chain procurementMANAGERIAL AND DECISION ECONOMICS, Issue 1 2008nar Keskinocak We study the strategic role of inventory in a sequential two-period procurement setting, where the supplier's capacity in the first period is limited and the retailer has the option to hold inventory. We compare the equilibrium under a dynamic contract, where the decisions are made at the beginning of each period, and a commitment contract, where the decisions for both periods are made at the beginning of the first period. We show that there is a critical capacity level below which the outcomes under both types of contracts are identical. When the first period capacity is above the critical level, the retailer holds inventory in equilibrium and the inventory is carried due to purely strategic reasons; as capacity increases, so does the strategic role of inventory. The supplier always prefers lower capacity than the retailer, and the difference between supplier-optimal and supply-chain optimal capacities, and the corresponding profits, can be significant. Finally, we find that the retailer's flexibility to hold inventory is not always good for the participants or for the channel. Copyright © 2008 John Wiley & Sons, Ltd. [source] Coupons and price discrimination in vertically-correlated marketsMANAGERIAL AND DECISION ECONOMICS, Issue 1 2004Jin-Li Hu This research analyzes the non-cooperative and cooperative strategies with respect to manufacturer and retailer coupons. In a model with one manufacturer selling its product to one retailer, it is found that the retailer can achieve third-degree price discrimination equilibrium in retail markets by issuing coupons to demanders with higher elasticity. Although facing only one retailer, the manufacturer can also achieve the same third-degree price discrimination equilibrium by issuing coupons directly to demanders of higher elasticity. However, when only one firm issues the coupon, both manufacturer and retailer coupons can help alleviate the channel profit loss due to double marginalization. If the manufacturer and the retailer non-cooperatively issue coupons, then the subgame-perfect Nash equilibrium outcomes are equivalent to those under the successive third-degree price discrimination. Moreover, cooperative strategies between the manufacturer and the retailer can eliminate double marginalization, achieve the vertical integration effect, and lead to higher profits, consumer surpluses, and social surpluses than non-cooperative coupon strategies. Copyright © 2004 John Wiley & Sons, Ltd. [source] The one-warehouse multiretailer problem with an order-up-to level inventory policyNAVAL RESEARCH LOGISTICS: AN INTERNATIONAL JOURNAL, Issue 7 2010uz Solyal Abstract We consider a two-level system in which a warehouse manages the inventories of multiple retailers. Each retailer employs an order-up-to level inventory policy over T periods and faces an external demand which is dynamic and known. A retailer's inventory should be raised to its maximum limit when replenished. The problem is to jointly decide on replenishment times and quantities of warehouse and retailers so as to minimize the total costs in the system. Unlike the case in the single level lot-sizing problem, we cannot assume that the initial inventory will be zero without loss of generality. We propose a strong mixed integer program formulation for the problem with zero and nonzero initial inventories at the warehouse. The strong formulation for the zero initial inventory case has only T binary variables and represents the convex hull of the feasible region of the problem when there is only one retailer. Computational results with a state-of-the art solver reveal that our formulations are very effective in solving large-size instances to optimality. © 2010 Wiley Periodicals, Inc. Naval Research Logistics, 2010 [source] Competing with channel partners: Supply chain conflict when retailers introduce store brandsNAVAL RESEARCH LOGISTICS: AN INTERNATIONAL JOURNAL, Issue 5 2010Hans Sebastian Heese Abstract Private-label products are of increasing importance in many retail categories. While national-brand products are designed by the manufacturer and sold by the retailer, the positioning of store-brand products is under the complete control of the retailer. We consider a scenario where products differ on a performance quality dimension and we analyze how retailer,manufacturer interactions in product positioning are affected by the introduction of a private-label product. Specifically, we consider a national-brand manufacturer who determines the quality of its product as well the product's wholesale price charged to the retailer. Given the national-brand quality and wholesale price, the retailer then decides the quality level of its store brand and sets the retail prices for both products. We find that a manufacturer can derive substantial benefits from considering a retailer's store-brand introduction when determining the national brand's quality and wholesale price. If the retailer has a significant cost disadvantage in producing high-quality products, the manufacturer does not need to adjust the quality of the national-brand product, but he should offer a wholesale price discount to ensure its distribution through the retailer. If the retailer is competitive in providing products of high-quality, the manufacturer should reduce this wholesale price discount and increase the national-brand quality to mitigate competition. Interestingly, we find the retailer has incentive to announce a store-brand introduction to induce the manufacturer's consideration of these plans in determining the national-brand product quality and wholesale price. © 2010 Wiley Periodicals, Inc. Naval Research Logistics, 2010 [source] The transshipment fund mechanism: Coordinating the decentralized multilocation transshipment problemNAVAL RESEARCH LOGISTICS: AN INTERNATIONAL JOURNAL, Issue 4 2010Eran Hanany Abstract The multilocation replenishment and transshipment problem is concerned with several retailers facing random demand for the same item at distinct markets, that may use transshipments to eliminate excess inventory/shortages after demand realization. When the system is decentralized so that each retailer operates to maximize their own profit, there are incentive problems that prevent coordination. These problems arise even with two retailers who may pay each other for transshipped units. We propose a new mechanism based on a transshipment fund, which is the first to coordinate the system, in a fully noncooperative setting, for all instances of two retailers as well as all instances of any number of retailers. Moreover, our mechanism strongly coordinates the system, i.e., achieves coordination as the unique equilibrium. The computation and information requirements of this mechanism are realistic and relatively modest. We also present necessary and sufficient conditions for coordination and prove they are always satisfied with our mechanism. Numerical examples illustrate some of the properties underlying this mechanism for two retailers. © 2010 Wiley Periodicals, Inc. Naval Research Logistics, 2010 [source] Locational tying of complementary retail itemsNAVAL RESEARCH LOGISTICS: AN INTERNATIONAL JOURNAL, Issue 5 2009Bacel Maddah Abstract We study a selling practice that we refer to as locational tying (LT), which seems to be gaining wide popularity among retailers. Under this strategy, a retailer "locationally ties" two complementary items that we denote by "primary" and "secondary." The retailer sells the primary item in an appropriate "department" of his or her store. To stimulate demand, the secondary item is offered in the primary item's department, where it is displayed in very close proximity to the primary item. We consider two variations of LT: In the multilocation tying strategy (LT-M), the secondary item is offered in its appropriate department in addition to the primary item's department, whereas in the single-location tying strategy (LT-S), it is offered only in the primary item's location. We compare these LT strategies to the traditional independent components (IC) strategy, in which the two items are sold independently (each in its own department), but the pricing/inventory decisions can be centralized (IC-C) or decentralized (IC-D). Assuming ample inventory, we compare and provide a ranking of the optimal prices of the four strategies. The main insight from this comparison is that relative to IC-D, LT decreases the price of the primary item and adjusts the price of the secondary item up or down depending on its popularity in the primary item's department. We also perform a comparative statics analysis on the effect of demand and cost parameters on the optimal prices of various strategies, and identify the conditions that favor one strategy over others in terms of profitability. Then we study inventory decisions in LT under exogenous pricing by developing a model that accounts for the effect of the primary item's stock-outs on the secondary item's demand. We find that, relative to IC-D, LT increases the inventory level of the primary item. We also link the profitability of different strategies to the trade-off between the increase in demand volume of the secondary item as a result of LT and the potential increase in inventory costs due to decentralizing the inventory of the secondary item. © 2009 Wiley Periodicals, Inc. Naval Research Logistics 2009 [source] Dynamic inventory management with cash flow constraintsNAVAL RESEARCH LOGISTICS: AN INTERNATIONAL JOURNAL, Issue 8 2008Xiuli Chao Abstract In this article, we consider a classic dynamic inventory control problem of a self-financing retailer who periodically replenishes its stock from a supplier and sells it to the market. The replenishment decisions of the retailer are constrained by cash flow, which is updated periodically following purchasing and sales in each period. Excess demand in each period is lost when insufficient inventory is in stock. The retailer's objective is to maximize its expected terminal wealth at the end of the planning horizon. We characterize the optimal inventory control policy and present a simple algorithm for computing the optimal policies for each period. Conditions are identified under which the optimal control policies are identical across periods. We also present comparative statics results on the optimal control policy. © 2008 Wiley Periodicals, Inc. Naval Research Logistics 2008 [source] Supply contracts in manufacturer-retailer interactions with manufacturer-quality and retailer effort-induced demandNAVAL RESEARCH LOGISTICS: AN INTERNATIONAL JOURNAL, Issue 3 2008Haresh Gurnani Abstract We consider a decentralized distribution channel where demand depends on the manufacturer-chosen quality of the product and the selling effort chosen by the retailer. The cost of selling effort is private information for the retailer. We consider three different types of supply contracts in this article: price-only contract where the manufacturer sets a wholesale price; fixed-fee contract where manufacturer sells at marginal cost but charges a fixed (transfer) fee; and, general franchise contract where manufacturer sets a wholesale price and charges a fixed fee as well. The fixed-fee and general franchise contracts are referred to as two-part tariff contracts. For each contract type, we study different contract forms including individual, menu, and pooling contracts. In the analysis of the different types and forms of contracts, we show that the price only contract is dominated by the general franchise menu contract. However, the manufacturer may prefer to offer the fixed-fee individual contract as compared to the general franchise contract when the retailer's reservation utility and degree of information asymmetry in costs are high. © 2008 Wiley Periodicals, Inc. 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