A Model and its Solution Method for a Two-Item Newsvendor Supply Chain with Return Policy and Demand Leakage
Journal Title: International Journal of Academic Research in Accounting, Finance and Management Sciences - Year 2014, Vol 4, Issue 1
Abstract
We study a one-manufacturer and one-retailer type of supply chain that the manufacturer manufactures two newsvendor-type items and offers a buy-back contractual commitment to the retailer who sells the items in a stochastic demand market with various prices, allowing demand leakage from high-priced item to low-priced one. The objective of this study is to coordinate the chain by jointly determining wholesale prices, buy-back prices, retail prices and order sizes. We first derive a succinct model for the chain in which the manufacturers expected profit subject to the retailer’s optimal expected profit will be explored. And a solution method to the case of uniformly distributed error demand is subsequently proposed; accordingly, a series of examples along with graphical concavity and satisfying constraint of the manufacturer’s expected profit are conducted to validate our solution method.
Authors and Affiliations
Che-Tsung Tung, Kuo-Hsien Wang, Yu-Je Lee
Keywords
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- EP ID EP162502
- DOI 10.6007/IJARAFMS/v4-i1/697
- Views 104
- Downloads 0
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