Abstract
This simple case enables students to examine a supply chain coordination problem in the context of a two-level supply chain with a retailer and a supplier. The case examines a retailer’s decision about its optimal order quantity from his supplier and the difference between this decentralized decision and the coordinated decision achieved when the retailer and the supplier are part of the same company. The case then asks students to find the optimal supply chain contracts that will coordinate the supply chain. This case can be used to teach the newsvendor model and supply chain coordination and contracts in courses focusing on supply chain management or in operations management courses that include a supply chain module. It can be used together with Note on Optimal Ordering Strategies and Supply Chain Coordination (UVA-OM-1371).
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