publication . Article . 2008

Strategic Inventories in Vertical Contracts

Ravi Anupindi; Krishnan S. Anand; Yehuda Bassok;
Open Access
  • Published: 01 Jan 2008 Journal: Management Science, volume 54, pages 1,792-1,804 (issn: 0025-1909, eissn: 1526-5501, Copyright policy)
  • Publisher: Institute for Operations Research and the Management Sciences (INFORMS)
Abstract
Classical reasons for carrying inventory include fixed (nonlinear) production or procurement costs, lead times, nonstationary or uncertain supply/demand, and capacity constraints. The last decade has seen active research in supply chain coordination focusing on the role of incentive contracts to achieve first-best levels of inventory. An extensive literature in industrial organization that studies incentives for vertical controls largely ignores the effect of inventories. Does the ability to carry inventory influence the problem of vertical control? Conversely, can inventories arise purely due to incentive effects? This paper explicitly considers both incentives...
Subjects
ACM Computing Classification System: ComputerApplications_COMPUTERSINOTHERSYSTEMS
free text keywords: Management Science and Operations Research, Strategy and Management, contracts, inventories, industrial organization, supply chain coordination, Incentive, Demand curve, Procurement, Profit (economics), Microeconomics, Supply chain, Tariffication, Operations management, Economics, Benefice, Inventory control
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