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A distribution free newsvendor model with consignment policy and retailer's royalty reduction

Title
A distribution free newsvendor model with consignment policy and retailer's royalty reduction
Author
Sarkar, Biswajit
Keywords
newsvendor; consignment stock; distribution free approach; retailer’s royalty reduction; supply chain management
Issue Date
2017-09
Publisher
TAYLOR & FRANCIS LTD
Citation
INTERNATIONAL JOURNAL OF PRODUCTION RESEARCH, Page. 1-26
Abstract
Reducing the system cost and achieving significant profit are the key factors for every successful business sector. A consignment contract under distribution-free approach may be a fruitful combination to achieve a profitable business. This model deals with a single-period newsvendor problem with a consignment policy. The consignment policy is an agreement between any two parties, named as the consignor and the consignee. Under Stackelberg approach, firms act as leader and follower. Both parties carry some parts of the holding cost instead of one. A new policy for paying the fixed fee to the consignee is introduced. This paper considers no specific probability distribution for customer’s demand except a known mean and standard deviation. An efficient approach is proposed to reduce the retailer’s cost and building a sustainable consignment contract. The solution of this model is obtained using distribution free approach. A comparison between the traditional supply chain policy and the consignment policy is established. The price-sensitivity on demand is analysed. Some numerical examples and graphical representations are given for both traditional and consignment policy. Result proves that consignment policy is dominating over the traditional policy and a significant reduction of retailer’s royalty is found.
URI
https://www.tandfonline.com/doi/abs/10.1080/00207543.2017.1399220https://repository.hanyang.ac.kr/handle/20.500.11754/72362
ISSN
0020-7543; 1366-588X
DOI
10.1080/00207543.2017.1399220
Appears in Collections:
COLLEGE OF ENGINEERING SCIENCES[E](공학대학) > INDUSTRIAL AND MANAGEMENT ENGINEERING(산업경영공학과) > Articles
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