Essays on supply contracts and dynamic pricing

Successful retailers like eBay and Amazon.com utilize consignment and/or wholesale contractual arrangements with their suppliers (also referred to as sellers) to manage the flow of goods, information and funds in their supply chains. Furthermore, today's pricing environment demands better, faster, and more frequent pricing decisions than ever before, and sellers' management of their inventory through dynamic pricing has contributed significantly to their financial success. The purpose of this study is two-fold. First, to investigate the decisions and channel performance under a consignment contractual arrangement and how they differ from a wholesale contractual arrangement. Second, to study a revenue management problem involving a seller of perishable products in an e-commerce setting where buyers are sensitive to both price and seller reputation.

Research issues addressed by this study fall under four themes: evaluation of contract preferences of retailer and supplier; coordination of retailer and supplier decisions (i.e. channel coordination); investigation of the effects of product competition on channel decisions and profits; and finally, development of a dynamic pricing strategy.

Our contributions to the existing body of literature are as follows: develop a better understanding of the factors contributing to the growing success of virtual retailers as a result of the increasing number of products that are being sold on consignment contractual arrangements; provide some insights on contractual preferences of managers to learn why they prefer consignment over wholesale contractual arrangement with certain sellers; develop incentives to promote better coordination between the supplier and retailer in a consignment contractual arrangement, thus creating a win-win situation for both players; develop a better understanding of the formation of reservation price, i.e. the amount a consumer is willing to pay for a product/service, from the perspective of consumer behavior. This work will unveil the underlying dynamics and relationships between reservation price and customer feedback rating of seller product/service quality which sellers can use to set product prices and maximize revenues.