Journal
COMPUTERS & INDUSTRIAL ENGINEERING
Volume 61, Issue 4, Pages 1268-1274Publisher
PERGAMON-ELSEVIER SCIENCE LTD
DOI: 10.1016/j.cie.2011.07.019
Keywords
Channel coordination; Cooperative advertising; Ordering policy; Return policy
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This study deals with the news-vendor problem to the case of a two-level supply chain consisting of one manufacturer and one retailer, and investigates the combined effects of the cooperative advertising mechanism, the return policy and the channel coordination. The manufacturer and the retailer could maintain the potential market size by making some marketing expenditures on some national brand names and invest in local advertising, but with diminishing returns. The decision problem facing the profit-oriented entities in the supply chain is to determine the optimal advertising and inventory policies for maximizing their own profit. Both the non-cooperative policy and the cooperative policy are formulated to offer structural and quantitative insights into the interplay between upstream and downstream entities of the supply chain. In addition, the implications of a profit-sharing mechanism based on achieving a win-win relationship of the channel members was also proposed. (C) 2011 Elsevier Ltd. All rights reserved.
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