Journal article
Channel coordination in a consignment contract
European journal of operational research, Vol.207(2), pp.897-905
12/01/2010
DOI: 10.1016/j.ejor.2010.05.027
Abstract
With the emergence of virtual market places, consignment selling has been thriving at an unprecedented pace. It has been shown in the literature that inefficiency exists in a decentralized consignment channel with a single revenue share agreement. In our study, we analyze contracts observed in practice that contain bonus or side payment terms, and examine whether they can promote better coordination between the supplier and the retailer. We found that no multi-tier Bonus system can fully coordinate the consignment channel. However, fine adjustments of bonus parameters can bring the channel close to full coordination. Additionally, we found revenue sharing with side payment contracts not only fully coordinate the channel, but they can also be customized to meet the needs of small, medium and large suppliers for extra retailer services such as warehousing and transportation. Managerial insights on how to design the contracts from the supplier, retailer and channel perspectives are discussed in the paper.
Details
- Title: Subtitle
- Channel coordination in a consignment contract
- Creators
- Dengfeng Zhang - Lingnan UniversityRenato de Matta - University of IowaTimothy J. Lowe - University of Iowa
- Resource Type
- Journal article
- Publication Details
- European journal of operational research, Vol.207(2), pp.897-905
- Publisher
- Elsevier B.V
- DOI
- 10.1016/j.ejor.2010.05.027
- ISSN
- 0377-2217
- eISSN
- 1872-6860
- Language
- English
- Date published
- 12/01/2010
- Academic Unit
- Business Analytics
- Record Identifier
- 9984380439202771
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