IDEAS home Printed from https://ideas.repec.org/a/eee/proeco/v144y2013i1p1-13.html
   My bibliography  Save this article

Coordination of competing supply chains with news-vendor and buyback contract

Author

Listed:
  • Wu, Desheng

Abstract

Under the competing supply chain framework, we examine the impact of buyback policy on retail price, order quantity and wholesale price in a duopoly of two manufacturer–retailer supply chains. Demand is assumed to follow a general distribution similar to a newsvendor case. We consider two channel policies for both competing supply chains: Vertical Integration (VI) and Manufacturer's Stackelberg (MS). We show that buyback strategy can lead to a higher profit than non-buyback in both VI and MS in competing supply chains, which is consistent with existing result in a single supply chain. We also show that the profits obtained by the supply chain individuals and the entire supply chain profit increase as the chain competition increases.

Suggested Citation

  • Wu, Desheng, 2013. "Coordination of competing supply chains with news-vendor and buyback contract," International Journal of Production Economics, Elsevier, vol. 144(1), pages 1-13.
    • Handle: RePEc:eee:proeco:v:144:y:2013:i:1:p:1-13
    DOI: 10.1016/j.ijpe.2011.11.032
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0925527311004956
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.ijpe.2011.11.032?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Li, Hantao & Ritchken, Peter & Wang, Yunzeng, 2009. "Option and forward contracting with asymmetric information: Valuation issues in supply chains," European Journal of Operational Research, Elsevier, vol. 197(1), pages 134-148, August.
    2. Hao Wang, 2004. "Do Returns Policies Intensify Retail Competition?," Marketing Science, INFORMS, vol. 23(4), pages 611-613, March.
    3. James P. Monahan, 1984. "A Quantity Discount Pricing Model to Increase Vendor Profits," Management Science, INFORMS, vol. 30(6), pages 720-726, June.
    4. S. Chan Choi, 1991. "Price Competition in a Channel Structure with a Common Retailer," Marketing Science, INFORMS, vol. 10(4), pages 271-296.
    5. Barry Alan Pasternack, 1985. "Optimal Pricing and Return Policies for Perishable Commodities," Marketing Science, INFORMS, vol. 4(2), pages 166-176.
    6. Deneckere, Raymond & Marvel, Howard P & Peck, James, 1997. "Demand Uncertainty and Price Maintenance: Markdowns as Destructive Competition," American Economic Review, American Economic Association, vol. 87(4), pages 619-641, September.
    7. Gérard P. Cachon, 2001. "Stock Wars: Inventory Competition in a Two-Echelon Supply Chain with Multiple Retailers," Operations Research, INFORMS, vol. 49(5), pages 658-674, October.
    8. Wu, Desheng & Baron, Opher & Berman, Oded, 2009. "Bargaining in competing supply chains with uncertainty," European Journal of Operational Research, Elsevier, vol. 197(2), pages 548-556, September.
    9. Timothy W. McGuire & Richard Staelin, 1983. "An Industry Equilibrium Analysis of Downstream Vertical Integration," Marketing Science, INFORMS, vol. 2(2), pages 161-191.
    10. Abel P. Jeuland & Steven M. Shugan, 1983. "Managing Channel Profits," Marketing Science, INFORMS, vol. 2(3), pages 239-272.
    11. Ru, Jun & Wang, Yunzeng, 2010. "Consignment contracting: Who should control inventory in the supply chain?," European Journal of Operational Research, Elsevier, vol. 201(3), pages 760-769, March.
    12. Eunkyu Lee & Richard Staelin, 1997. "Vertical Strategic Interaction: Implications for Channel Pricing Strategy," Marketing Science, INFORMS, vol. 16(3), pages 185-207.
    13. Martin A. Lariviere & Evan L. Porteus, 2001. "Selling to the Newsvendor: An Analysis of Price-Only Contracts," Manufacturing & Service Operations Management, INFORMS, vol. 3(4), pages 293-305, May.
    14. Fangruo Chen & Awi Federgruen & Yu-Sheng Zheng, 2001. "Coordination Mechanisms for a Distribution System with One Supplier and Multiple Retailers," Management Science, INFORMS, vol. 47(5), pages 693-708, May.
    15. Edwin S. Mills, 1959. "Uncertainty and Price Theory," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 73(1), pages 116-130.
    16. Deneckere, Raymond & Marvel, Howard P & Peck, James, 1997. "Demand Uncertainty and Price Maintenance: Markdowns as Destructive Competition," American Economic Review, American Economic Association, vol. 87(4), pages 619-641, September.
    17. V. Padmanabhan & I. P. L. Png, 2004. "Reply to “Do Returns Policies Intensify Retail Competition?”," Marketing Science, INFORMS, vol. 23(4), pages 614-618, January.
    18. Minakshi Trivedi, 1998. "Distribution Channels: An Extension of Exclusive Retailership," Management Science, INFORMS, vol. 44(7), pages 896-909, July.
    19. Yunzeng Wang & Yigal Gerchak, 2001. "Supply Chain Coordination when Demand Is Shelf-Space Dependent," Manufacturing & Service Operations Management, INFORMS, vol. 3(1), pages 82-87, August.
    20. Rajeev Kohli & Heungsoo Park, 1989. "A Cooperative Game Theory Model of Quantity Discounts," Management Science, INFORMS, vol. 35(6), pages 693-707, June.
    21. Z. Kevin Weng, 1995. "Channel Coordination and Quantity Discounts," Management Science, INFORMS, vol. 41(9), pages 1509-1522, September.
    22. Gérard P. Cachon & Paul H. Zipkin, 1999. "Competitive and Cooperative Inventory Policies in a Two-Stage Supply Chain," Management Science, INFORMS, vol. 45(7), pages 936-953, July.
    23. repec:inm:ormnsc:v:30:y:1984:i:12:p:1524-1539(2 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Xing Gao & Weijun Zhong, 2015. "Information security investment for competitive firms with hacker behavior and security requirements," Annals of Operations Research, Springer, vol. 235(1), pages 277-300, December.
    2. B.C. Giri & S. Bardhan & T. Maiti, 2016. "Coordinating a three-layer supply chain with uncertain demand and random yield," International Journal of Production Research, Taylor & Francis Journals, vol. 54(8), pages 2499-2518, April.
    3. Lennart Hammerström & Giebe Carsten, 2022. "Taxonomy of an Liot Device Based upon Production Functions," European Journal of Economics and Business Studies Articles, Revistia Research and Publishing, vol. 8, ejes_v8_i.
    4. Liu, Zhongyi & Chen, Lihua & Li, Ling & Zhai, Xin, 2014. "Risk hedging in a supply chain: Option vs. price discount," International Journal of Production Economics, Elsevier, vol. 151(C), pages 112-120.
    5. Chunlin Luo & Xin Tian & Xiaobing Mao & Qiang Cai, 2018. "Coordinating Supply Chain with Buy-Back Contracts in the Presence of Risk Aversion," Asia-Pacific Journal of Operational Research (APJOR), World Scientific Publishing Co. Pte. Ltd., vol. 35(02), pages 1-19, April.
    6. Cárdenas-Barrón, Leopoldo Eduardo & Sana, Shib Sankar, 2014. "A production-inventory model for a two-echelon supply chain when demand is dependent on sales teams׳ initiatives," International Journal of Production Economics, Elsevier, vol. 155(C), pages 249-258.
    7. Wu, Jiang & Zou, Liuxin & Gong, Yeming & Chen, Mingyang, 2021. "The anti-collusion dilemma: Information sharing of the supply chain under buyback contracts," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 152(C).
    8. Choi, Tsan-Ming & Chen, Yue & Chung, Sai Ho, 2019. "Online-offline fashion franchising supply chains without channel conflicts: Choices on postponement and contracts," International Journal of Production Economics, Elsevier, vol. 215(C), pages 174-184.
    9. Chen, Zhisong & Su, Shong-Iee Ivan, 2022. "Countervailing effect and mitigation policy: A game-theoretical study in dual international competing photovoltaic supply chains," Renewable Energy, Elsevier, vol. 183(C), pages 160-171.
    10. Fezzeh Abanavaz & Morteza Khakzar Bafruei, 2020. "Investigating the Return of Goods in Supply Chain," International Review of Management and Marketing, Econjournals, vol. 10(4), pages 170-176.
    11. Dong, Binwei & Ren, Yufei & McIntosh, Christopher, 2023. "A co-opetitive newsvendor model with product substitution and a wholesale price contract," European Journal of Operational Research, Elsevier, vol. 311(2), pages 502-514.
    12. Seo, Kyowon & Go, Sarang & Kim, Byungdo, 2020. "Pricing strategies under markets with time gap between purchase and consumption," Journal of Business Research, Elsevier, vol. 120(C), pages 312-320.
    13. Qi, Lian & Lee, Kangbok, 2015. "Supply chain risk mitigations with expedited shipping," Omega, Elsevier, vol. 57(PA), pages 98-113.
    14. Farhat, Mlouka & Akbalik, Ayse & Hadj-Alouane, Atidel B. & Sauer, Nathalie, 2019. "Lot sizing problem with batch ordering under periodic buyback contract and lost sales," International Journal of Production Economics, Elsevier, vol. 208(C), pages 500-511.
    15. Jianjun Yu & Dan Zhu, 2018. "Study on the Selection Strategy of Supply Chain Financing Modes Based on the Retailer’s Trade Grade," Sustainability, MDPI, vol. 10(9), pages 1-12, August.
    16. Bo Yan & Xiaoxu Chen & Hongyuan Li & Yixian Sun, 2022. "Managing homogeneous products in two competing supply chains under price and logistics service," Electronic Commerce Research, Springer, vol. 22(3), pages 691-713, September.
    17. Ma, Xueli & Wang, Jian & Bai, Qingguo & Wang, Shuyun, 2020. "Optimization of a three-echelon cold chain considering freshness-keeping efforts under cap-and-trade regulation in Industry 4.0," International Journal of Production Economics, Elsevier, vol. 220(C).
    18. Huang, He & Xu, Hongyan, 2015. "Dual sourcing and backup production: Coexistence versus exclusivity," Omega, Elsevier, vol. 57(PA), pages 22-33.
    19. Kirshner, Samuel N. & Shao, Lusheng, 2018. "Internal and external reference effects in a two-tier supply chain," European Journal of Operational Research, Elsevier, vol. 267(3), pages 944-957.
    20. Hsieh, Chung-Chi & Chang, Yih-Long & Wu, Cheng-Han, 2014. "Competitive pricing and ordering decisions in a multiple-channel supply chain," International Journal of Production Economics, Elsevier, vol. 154(C), pages 156-165.
    21. Chen, Zhisong & Su, Shong-Iee Ivan, 2020. "International competition and trade conflict in a dual photovoltaic supply chain system," Renewable Energy, Elsevier, vol. 151(C), pages 816-828.
    22. Yao-Yu Wang & Jiasen Sun & Jian-Cai Wang, 2016. "Equilibrium markup pricing strategies for the dominant retailers under supply chain to chain competition," International Journal of Production Research, Taylor & Francis Journals, vol. 54(7), pages 2075-2092, April.
    23. Tsao, Yu-Chung & Lu, Jye-Chyi & An, Na & Al-Khayyal, Faiz & Lu, Richard W. & Han, Guanghua, 2014. "Retailer shelf-space management with trade allowance: A Stackelberg game between retailer and manufacturers," International Journal of Production Economics, Elsevier, vol. 148(C), pages 133-144.
    24. Jafar Heydari & Tsan-Ming Choi & Saghi Radkhah, 2017. "Pareto Improving Supply Chain Coordination Under a Money-Back Guarantee Service Program," Service Science, INFORMS, vol. 9(2), pages 91-105, June.
    25. Bo Yan & Jing Fan & Congyan Cai & Jing Fang, 2020. "Supply chain coordination of fresh Agri-products based on value loss," Operations Management Research, Springer, vol. 13(3), pages 185-196, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Subhajyoti Bandyopadhyay & Anand A. Paul, 2010. "Equilibrium Returns Policies in the Presence of Supplier Competition," Marketing Science, INFORMS, vol. 29(5), pages 846-857, 09-10.
    2. Desheng Wu, 2011. "Joint pricing-servicing decision and channel strategies in the supply chain," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 19(1), pages 99-137, March.
    3. Syed Asif Raza, 2022. "A bibliometric analysis of pricing models in supply chain," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 21(2), pages 228-251, April.
    4. Ghosh, Debabrata & Shah, Janat, 2015. "Supply chain analysis under green sensitive consumer demand and cost sharing contract," International Journal of Production Economics, Elsevier, vol. 164(C), pages 319-329.
    5. Fangruo Chen, 1999. "Decentralized Supply Chains Subject to Information Delays," Management Science, INFORMS, vol. 45(8), pages 1076-1090, August.
    6. Xia, Yusen & Gilbert, Stephen M., 2007. "Strategic interactions between channel structure and demand enhancing services," European Journal of Operational Research, Elsevier, vol. 181(1), pages 252-265, August.
    7. Wang, Charles X. & Qian, Zhuang & Zhao, Yabing, 2018. "Impact of manufacturer and retailer's market pricing power on customer satisfaction incentives in supply chains," International Journal of Production Economics, Elsevier, vol. 205(C), pages 98-112.
    8. Stephen M. Gilbert & Gang Yu & Yusen Xia, 2007. "The strategic effects of a merger upon supplier interactions," Naval Research Logistics (NRL), John Wiley & Sons, vol. 54(2), pages 162-175, March.
    9. Gérard P. Cachon & A. Gürhan Kök, 2010. "Competing Manufacturers in a Retail Supply Chain: On Contractual Form and Coordination," Management Science, INFORMS, vol. 56(3), pages 571-589, March.
    10. Lee, Eunji & Minner, Stefan, 2024. "How power structure and markup schemes impact supply chain channel efficiency under price-dependent stochastic demand," European Journal of Operational Research, Elsevier, vol. 318(1), pages 297-309.
    11. Zhou, Yong-Wu & Min, Jie & Goyal, Suresh K., 2008. "Supply-chain coordination under an inventory-level-dependent demand rate," International Journal of Production Economics, Elsevier, vol. 113(2), pages 518-527, June.
    12. Sarmah, S.P. & Acharya, D. & Goyal, S.K., 2006. "Buyer vendor coordination models in supply chain management," European Journal of Operational Research, Elsevier, vol. 175(1), pages 1-15, November.
    13. Hsieh, Chung-Chi & Wu, Cheng-Han, 2009. "Coordinated decisions for substitutable products in a common retailer supply chain," European Journal of Operational Research, Elsevier, vol. 196(1), pages 273-288, July.
    14. Ingene, Charles A. & Taboubi, Sihem & Zaccour, Georges, 2012. "Game-Theoretic Coordination Mechanisms in Distribution Channels: Integration and Extensions for Models Without Competition," Journal of Retailing, Elsevier, vol. 88(4), pages 476-496.
    15. Krafft, Manfred & Goetz, Oliver & Mantrala, Murali & Sotgiu, Francesca & Tillmanns, Sebastian, 2015. "The Evolution of Marketing Channel Research Domains and Methodologies: An Integrative Review and Future Directions," Journal of Retailing, Elsevier, vol. 91(4), pages 569-585.
    16. Ghosh, Debabrata & Shah, Janat, 2012. "A comparative analysis of greening policies across supply chain structures," International Journal of Production Economics, Elsevier, vol. 135(2), pages 568-583.
    17. Hwan Lee, Chang & Rhee, Byong-Duk, 2010. "Coordination contracts in the presence of positive inventory financing costs," International Journal of Production Economics, Elsevier, vol. 124(2), pages 331-339, April.
    18. Wu, Desheng & Baron, Opher & Berman, Oded, 2009. "Bargaining in competing supply chains with uncertainty," European Journal of Operational Research, Elsevier, vol. 197(2), pages 548-556, September.
    19. Yingxue Zhao & Tsan-Ming Choi & T. C. E. Cheng & Shouyang Wang, 2017. "Mean-risk analysis of wholesale price contracts with stochastic price-dependent demand," Annals of Operations Research, Springer, vol. 257(1), pages 491-518, October.
    20. Honggang Hu & Quan Zheng & Xiajun Amy Pan, 2022. "Agency or Wholesale? The Role of Retail Pass-Through," Management Science, INFORMS, vol. 68(10), pages 7538-7554, October.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:proeco:v:144:y:2013:i:1:p:1-13. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/ijpe .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.