J.A.A. van der Veen
- Using contract mechanisms to coordinate product line decisions in supply chains
- 16th International Annual EurOMA Conference (EurOMA 2009), Göteborg, Sweden
- Book/source title
- Proceedings of the 16th International Annual EurOMA Conference
- Document type
- Conference contribution
- Faculty of Economics and Business (FEB)
- Amsterdam School of Economics Research Institute (ASE-RI)
This paper addresses product line decisions in a supply chain (SC) consisting of a single Buyer, a single Supplier and end-consumers comprised of two segments with different willingness-to-pay. Under the assumption that the final demand and the segments’ willingness-to-pay are deterministic, it is demonstrated that sub-optimization occurs when the decisions are decentralized. That is, a decentralized SC can sell a lower or a higher number of product variants when compared to a centralized SC. To overcome this issue, contract mechanisms such as slotting allowance and revenue sharing are analyzed for their ability to provide SC coordination and win-win opportunities for all parties involved.
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