Supply Chain Coordination with Consumer Returns using a Sales Rebate Contract and VMI partnership

摘要

This paper investigates a supply chain that consists of a manufacturer and a retailer where the retailer determines the retail price and customer service level while experiencing customer returns and price dependent stochastic demand. We propose an agreement between the manufacturer and the retail that includes VMI partnership and sales rebate contract. VMI facilities the application of the sales rebate contract since information sharing in VMI allows the supplier to obtain actual sales data. We consider two forms of sales rebate in the model, linear rebate and target rebate. Because of a proper rebate contract, the retailer lower price to the system-wide optimal prices so as to increase demand a further improve the aggregate chain profit. We study two different forms of sales rebate contract and show that these two agreements can achieve perfect supply chain coordination.