Coordinating order quantities between the manufacturer and the buyer: a generalized newsvendor model. (English) Zbl 1043.90521

Summary: A generalized newsvendor model is developed to analyze the coordinated quantity decisions between the manufacturer and the buyer. The manufacturer and the buyer operate to meet random demand of one product with a short lifecycle. The analytical results for the general newsvendor model are obtained. Our analysis of the generalized newsvendor model developed yields the insights into the coordination structure between the manufacturer and the buyer. Quantity discount policies are developed as incentive policies, which the manufacturer may use to induce the buyer to order the coordinated quantity.


90B60 Marketing, advertising
90B90 Case-oriented studies in operations research
Full Text: DOI


[1] Barlow, R.E.; Proschan, F., Statistical theory of reliability and life testing, (1975), Holt, Richard & Winston New York · Zbl 0379.62080
[2] Benton, W.C.; Park, S., A classification of literature on determining the lot size under quantity discounts, European journal of operational research, 92, 2, 219-238, (1996) · Zbl 0916.90084
[3] Fathi, Y.; Nuttle, H., Maximin vs. expected profit and the faithful newsboy problem, IIE transactions, 19, 2, 238-240, (1987)
[4] Fisher, M.; Raman, A., Reducing the cost of demand uncertainty through accurate response to early sales, Operations research, 44, 87-99, (1996) · Zbl 0847.90065
[5] Fites, D.V., Make your dealers your partners, Harvard business review, 74, 2, 84-95, (1996)
[6] Goyal, S.K.; Gupta, Y.P., Integrated inventory models: the buyer – vendor coordination, European journal of operational research, 41, 3, 261-269, (1989)
[7] Hadley, G.; Whitin, T.M., Analysis of inventory systems, (1963), Prentice-Hall Englewood Cliffs, NJ · Zbl 0133.42901
[8] Hax, A.C.; Candea, D., Production and inventory management, (1984), Prentice-Hall Englewood Cliffs, NJ
[9] Jeuland, A.; Shugan, S., Managing channel profits, Marketing science, 2, 2, 239-272, (1983)
[10] Kohli, R.; Park, H., Coordinating buyer – seller transactions across multiple products, Management science, 40, 9, 1145-1150, (1994) · Zbl 0818.90033
[11] Lal, R.; Staelin, R., An approach for developing an optimal discount pricing policy, Management science, 30, 12, 1524-1539, (1984)
[12] Mazzola, J.; Schantz, R., Single-facility resourse allocation under capacity-based economies and diseconomies of scope, Management science, 41, 5, 669-689, (1995) · Zbl 0836.90088
[13] McGuire, T.W.; Staelin, R., An industry equilibrium analysis of downstream vertical integration, Marketing science, 2, 2, 161-191, (1983)
[14] Merrills, R., How northern telecom competes on time, Harvard business review, 67, 4, 108-114, (1989)
[15] Munson, C.L.; Rosenblatt, M.J., Theories and realities of quantity discounts: an exploratory study, Production and operations management, 7, 4, 352-369, (1998)
[16] Oren, S.; Smith, S.; Wilson, R., Competitive nonlinear tariffs, Journal of economic theory, 29, 49-71, (1983) · Zbl 0495.90015
[17] Parlar, M.; Weng, Z.K., Designing a firm’s coordinated manufacturing and supply decisions with short product lifecycles, Management science, 43, 10, 1329-1344, (1997)
[18] Silver, E.A.D.; Pyke; Peterson, R., Decision systems for inventory management and production planning, (1998), Wiley New York
[19] Tirole, J., The theory of industrial organization, (1993), The MIT Press Cambridge, MA
[20] Webster, S.; Weng, Z.K., A risk-free perishable item return policy, Manufacturing and service operations management, 2, 1, 100-106, (2000)
[21] Weng, Z.K., Channel coordination and quantity discounts, Management science, 41, 9, 1509-1522, (1995) · Zbl 0861.90067
[22] Weng, K., Modeling quantity discounts under general price-sensitive demand functions: optimal policies and relationships, European journal of operational research, 86, 2, 300-314, (1995) · Zbl 0906.90102
[23] Weng, Z.K., Pricing and ordering strategies in manufacturing and distribution alliance, Supply chain management, IIE transactions, 29, 8, 681-692, (1997), (special issue)
This reference list is based on information provided by the publisher or from digital mathematics libraries. Its items are heuristically matched to zbMATH identifiers and may contain data conversion errors. It attempts to reflect the references listed in the original paper as accurately as possible without claiming the completeness or perfect precision of the matching.