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| Author: | Taylor, T. A. |
| Title: | Channel Coordination Under Price Protection, Midlife Returns, and End-of-Life Returns in Dynamic Markets |
| Journal: | Management Science
2001 : SEP, VOL. 47:9, p. 1220-1234 |
| Index terms: | SUPPLY CHAIN MANAGEMENT INCENTIVES INVENTORY CONTROL |
| Language: | eng |
| Abstract: | This paper examines three channel policies that are used in declining price environments: Price protection (P) is a mechanism under which the manufacturer pays the retailer a credit applying to the retailer's unsold inventory when the wholesale price drops during the life cycle; midlife returns (M) allow the retailer to return units partway through the life cycle at some rebate; and end-of-life returns (E) allow the retailer to return unsold units at the end of the life cycle. Under declining retail prices, if the wholesale prices and the return rebates are set properly, then EM (i.e., midlife and end-of-life returns) achieves channel coordination. However, such a policy may not be implementable because it may require the manufacturer to he worse off as a result of coordination. |
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