Ordering and pricing policies in a manufacturing and distribution supply chain for fashion products

Scott Webster, Z. Kevin Weng

Research output: Contribution to journalArticle

44 Scopus citations

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 languageEnglish (US)
Pages (from-to)476-486
Number of pages11
JournalInternational Journal of Production Economics
Volume114
Issue number2
DOIs
StatePublished - Aug 1 2008
Externally publishedYes

Keywords

  • Fashion products
  • Short life-cycle product
  • Supply chain

ASJC Scopus subject areas

  • Business, Management and Accounting(all)
  • Economics and Econometrics
  • Management Science and Operations Research
  • Industrial and Manufacturing Engineering

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