Supply chain strategies based on recourse model for very short life cycle products

Firms that sell very short life cycle products often receive quantity discounts from their suppliers and transporters for placing larger orders. Practitioners and researchers have begun to recognize the need to decide the end of the season markdowns by studying the sales pattern. The use of these op...

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Bibliographic Details
Published in:International journal of production economics 2010-11, Vol.128 (1), p.3-10
Main Authors: Patil, Rahul, Avittathur, Balram, Shah, Janat
Format: Article
Language:English
Subjects:
Costs
Discounts
Fashion retail supply chain
Impact analysis
Inventory control
JIT
Life cycle engineering
Markdown pricing
Mathematical models
Mathematical programming
Placing
Pricing policies
Product life cycle
Quantity discounts
Quantity discounts Inventory control JIT Fashion retail supply chain Quick Response strategies Markdown pricing
Quick Response strategies
Stochastic models
Stochasticity
Strategy
Studies
Suppliers
Supply chain management
Supply chains
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Summary:Firms that sell very short life cycle products often receive quantity discounts from their suppliers and transporters for placing larger orders. Practitioners and researchers have begun to recognize the need to decide the end of the season markdowns by studying the sales pattern. The use of these options can affect supply chain mismatch risks and costs. In this paper, we study the impact of quantity discounts and transportation cost structures on procurement, shipment and clearance pricing decisions through a stochastic programming with recourse formulation. We propose a solution procedure that efficiently solves this stochastic non-linear problem. Our computational experiments suggest that it is not always necessary to select the most complex action plan. Under some business environments, the conventional strategy of placing and transporting a single large order is a better option. We then identify situations where options such as markdowns and the use of quick response suppliers could be useful.
ISSN:0925-5273
1873-7579
DOI:10.1016/j.ijpe.2010.01.025