Advances in Production Engineering & Management
Volume 11 | Number 3 | September 2016 | pp 207–215
http://dx.doi.org/10.14743/apem2016.3.221
Consideration of a buyback contract model that features game-leading marketing strategies
He, H.; Jian, M.; Fang, X.
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A B S T R A C T
Enterprises will sacrifice profits for market shares. For this reason, the make-to-stock upstream expects the downstream to order more. The paper argues the game leader sales-oriented upstream, motivating downstream make no shortage, and attempts to execute a buyback contract to reach realistic decisions. In this article, we research a supplier that is a sales-oriented leader and a retailer that is a profit-oriented follower. The retailer is required to order more than its optimal quantity. The primary analysis emphasizes either enhancing the buyback price or reducing the wholesale price. In the results, the buyback contract parameters are limited by both the sales-oriented supplier's retained earnings and the distribution of market demand. Numerical examples are given to illustrate contract parameters that affect the supply chain coordination, the order quantity of the retailer and the profit of the supply chain. The previous buyback contract literature assumes not only that the supplier and retailer are profit oriented but also that they achieve both supply-chain coordination and Pareto optimality. However, the paper discusses the parameters of the buyback contract when the supplier is sales oriented.
A R T I C L E I N F O
Keywords • Buyback contract, Marketing strategy, Supply chain coordination
Corresponding author • He, H.
Article history • Received 12 June 2016, Revised 8 July 2016, Accepted 18 July 2016
Published on-line • 9 September 2016
E X P O R T C I T A T I O N
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