Both random yield and uncertain demand are common occurrences in a wide range of industries. We consider a supply chain comprised of a single manufacturer and a single retailer selling short life-cycle products with random yield and uncertain demand. We analyze two alternatives for doing business. One alternative is the traditional retailer-managed-inventory (RMI) partnership and the other alternative is the vendor-managed-inventory (VMI) partnership. We identify some qualitative implications of random yield for the decentralized supply chains under both partnerships. We also compare the channel performance of the RMI and VMI supply chains and the integrated supply chain where the manufacturer owns her retail channel.
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