Abstract | ||
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Off-price retailers buy excess inventory from manufacturers and retailers and offer it at discounts to consumers. Off-price retailers want a larger assortment of trendy products, which provides retailers with a way to sell excess inventory. We analyze a supply chain of a manufacturer who sells a product to a retailer. Upon realizing demand, the retailer can sell excess inventory to the off-price retailer. The retailer and off-price retailer have their exclusive consumer segments and share a dual segment. We find that adding the off-price retailer increases the manufacturer's optimal expected profit. Interestingly, selling inventory to the off-price retailer may decrease or increase the retailer's optimal expected profit. The retailer's optimal expected profit increases when the off-price retailer has a large exclusive consumer segment. Also, centralization in a supply chain with an off-price retailer leads to larger increase in the optimal order quantity and expected profit compared with centralization in a supply chain without an off-price retailer. The off-price retailer can be worse-off by having a large consumer segment shared with the retailer. Finally, the effect of the off-price retailer consumer segment demand being a random variable has only a small effect on the order quantity, the wholesale price, and profits. |
Year | DOI | Venue |
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2019 | 10.1080/24725854.2018.1550824 | IISE TRANSACTIONS |
Keywords | DocType | Volume |
Newsvendor,off-price retailers,supply chain management | Journal | 51.0 |
Issue | ISSN | Citations |
6.0 | 2472-5854 | 0 |
PageRank | References | Authors |
0.34 | 0 | 2 |
Name | Order | Citations | PageRank |
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Moutaz Khouja | 1 | 204 | 19.29 |
Jing Zhou | 2 | 327 | 54.75 |