Abstract
In the paper, we develop a model of manufacturing and distribution supply chains that are operating to meet price-sensitive random demand for products with short life cycles such as fashion products. Two specific scenarios are considered. The manufacturer-controlled scenario is one where the distributor shares price-sensitive random demand with the manufacturer, and the manufacturer controls the supply chain stocking decisions and bears the risk of overstocking costs. The distributor-controlled scenario works in the opposite direction. Prevailing wisdom suggests that the manufacturer should control supply chain decisions (e.g., via vendor-managed inventory). Our results indicate that such an arrangement is against the interest of a distributor selling short life-cycle products. Furthermore, we find that the total supply chain profit is generally higher when the distributor controls the supply chain stocking decisions and bears the risk of overstocking costs.
Original language | English (US) |
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Pages (from-to) | 476-486 |
Number of pages | 11 |
Journal | International Journal of Production Economics |
Volume | 114 |
Issue number | 2 |
DOIs | |
State | Published - Aug 2008 |
Externally published | Yes |
Keywords
- Fashion products
- Short life-cycle product
- Supply chain
ASJC Scopus subject areas
- General Business, Management and Accounting
- Economics and Econometrics
- Management Science and Operations Research
- Industrial and Manufacturing Engineering