Management Sciences and Quantitative Methods Commons^™

Individually Rational Buyback Contracts With Inventory Level Dependent Demand, Lokendra Devagan, R K Amit, Peeyush Mehta, Sanjeev Swami, Kripa Shanker

R K Amit

In this paper, we consider a supply chain coordination problem when demand faced by a retailer is influenced by the amount of inventory displayed on the retail shelf. We assume that shelf space inventory is used as one of the levers to stimulate demand. Our objective in this research is to design individually rational contracts that coordinate the supply chain when the retailer faces inventory-level-dependent demand. We consider a buyback contract where any leftover inventory at the retailer can be returned to the supplier at a pre-specified terms of the buyback contract. The existing buyback contracts in the supply chain …