Markdown Money Research Articles

基于利润-CVaR的供应链价格补贴契约优化与协调研究

本文研究风险中性供应商和风险厌恶零售商组成的二级供应链协调问题。运用利润-CVaR度量零售商风险厌恶，建立随机需求下供应链价格补贴协调模型。在一定范围内，最优订购量随风险厌恶因子和CVaR权重的增加而减少，价格补贴随CVaR权重和风险厌恶因子的增加而增加，价格补贴契约能完美协调供应链并通过数值算例进行验证。 This paper studied the coordination of a two-echelon supply chain with a risk-neutral supplier and a risk-averse retailer. The risk aversion of the retailer was measured by profit-CVaR. We construct the markdown money contract coordination model of supply chain under stochastic demand. At a certain range, the optimal ordering quantity is reduced along with the increase of risk aversion factor and weight of CVaR; and markdown money is increased with the increase of risk aversion factor and weight of CVaR. Markdown money contract can perfectly coordinate supply chain. And we verify the conclusions through a numerical example.

Enhancing Economic Sustainability by Markdown Money Supply Contracts in the Fashion Industry: China vs U.S.A.

Supply chain contracts, such as the markdown money policy (MMP), are commonly adopted in the fashion industry. In this paper, we explore how fashion companies can use MMP to enhance economic sustainability from the cross-cultural perspective. We conduct case studies on two fashion firms (suppliers), one from China and one from U.S.A., that are adopting MMP in their respective supply chains. Via semi-structured interviews with staff members and some public data searching of the target companies, we find that the cultural factors, such as power distance and collectivism/individualism, affect contract selection, contract management, supplier–retailer leadership, and supplier–retailer relationship. We use the Hofstede’s national cultural dimensions theory to explain our insights. Specifically, in China, a country with a relatively high degree of power distance and collectivism, the companies tend to care more about the group interest and loyalty. The Chinese fashion companies are more willing to play the leading role in managing the relationships with their retailers, and offer MMP to them. In the U.S.A., a country with a relatively low degree of power distance and individualism, the companies are more likely to emphasize their own interest in trading. In fact, we find that American fashion suppliers tend to bargain with their retailers, and they are less willing to proactively provide the markdown money as a sponsor. Finally, managerial implications are provided, and several future challenges on MMP are examined.

Carbon footprint tax on fashion supply chain systems

In this paper, the impacts brought by the carbon footprint tax on fashion supply chain systems are analytically examined. First, based on various industrial practices in fashion apparel, we construct the two-echelon manufacturer–retailer analytical fashion supply chain model. Second, by exploring the fashion supply chain with a highly fashionable product, we study how the carbon footprint tax can affect the retailer’s optimal choice of sourcing. We further investigate the significance of carbon footprint tax on fashion supply chain management under two commonly adopted contracts, namely the pure wholesale pricing (WP) contract and the markdown money (MM) contract. Our analytical findings illustrate that: (1) under the WP contract case: A properly set carbon footprint tax, which depends on the product’s manufacturing and shipping costs, and manufacturer’s profit margin, can successfully entice the retailer to source locally. (2) Under the MM contract case where the MM contract is set in a way that the supply chain is coordinated: (a) If the carbon footprint tax is equal to the difference between the product costs from the local and offshore sourcing, then the optimal MM rates and the optimal supply chain product quantities from the local and offshore sourcing modes are the same. (b) Similar to the WP contract case, we prove analytically that a properly determined carbon footprint tax can always entice the retailer to source locally. Further analysis with extended models under the consideration of having a stochastically larger demand with the local sourcing mode is conducted.

The Coordination of Fashion Supply Chains With a Risk-Averse Supplier Under the Markdown Money Policy

Motivated by the popular markdown money policy (MMP) in the textiles and clothing (TC) industry, in this paper, we explore how this policy performs in a two-stage TC/fashion supply chain with an upstream risk-averse manufacturer (supplier) and a downstream risk-neutral retailer. Specifically, we investigate both the optimal decisions of the risk-averse supplier with respect to the MMP contract parameters and the optimal ordering decision of the risk-neutral retailer so that the whole supply chain can be coordinated (i.e., optimized). We then conduct a numerical study with the real data from two companies to explore the performance of the optimal MMP proposed in our paper. Important insights and specific implications to the industry practitioners are discussed.

Game theoretic analysis of a multi-period fashion supply chain with a risk averse retailer

This paper studies a single-manufacturer single-retailer multi-period fashion supply chain which sells a category of short-life highly fashionable products. The retailer is risk averse and the supply chain is led by the upstream manufacturer. This paper studies two commonly seen contracts in the fashion industry, namely the pure wholesale pricing contract (PWPC) and the markdown money contract (MDMC). The efficient region for the risk averse retailer’s optimal ordering quantity for each contract is found and this region will: 1) become smaller if the wholesale price increases (under both PWPC and MDMC); 2) get larger when the markdown money increases (under MDMC). We introduce the concept of ‘risk averse quantity reduction level’ (RAQRL). Our analytical findings further indicate that: 1) under scenario one in which the manufacturer’s goal is to maximise the supply chain’s expected profit, the appropriately set MDMC can coordinate the supply chain whereas PWPC cannot; 2) under scenario two in which the manufacturer’s goal is to maximise the supply chain’s expected profit while ensuring the variance of profit is within a limit, both PWPC and MDMC can coordinate the supply chain.

Distribution Free Approach for Coordination of a Supply Chain with Consumer Return

Consumer return is considered in a coordination of a supply chain consisting of one manufacturer and one retailer. A distribution free approach is employed to deal with a centralized decision model and a decentralized model which are constructed under the situation with only knowing the demand function's mean and variance, respectively. A markdown money contract is designed to coordinate the supply chain, and it is also proved that the contract can make the supply chain perfectly coordinated. Several numerical examples are given at the end of this paper.

Coordination of a fashion apparel supply chain under lead-time-dependent demand uncertainty

This article develops a game theoretic model of a fashion apparel supply chain consisting of one manufacturer and one retailer to study supply chain coordination under lead-time-dependent demand uncertainty. We explicitly model the effect of the lead time on demand uncertainty and find that a markdown money mechanism can coordinate the supply chain with exogenous retail price. We also investigate the effects of the lead time on the markdown money coordination mechanism and channel profit. We find that, when the lead time increases, the manufacturer will charge the retailer a lower unit wholesale price to stimulate the order quantity and give a lower chargeback rate to restrict excess order if the basic demand uncertainty is sufficiently large; otherwise, the manufacturer may increase them. Although a shorter lead time may incur a higher cost for the manufacturer, the manufacturer would like to decrease the lead time to cut down the leftovers if the basic demand uncertainty is sufficiently high. The manufacturer may decrease the lead time even when the basic demand uncertainty is sufficiently low. We also give a revenue-sharing contract to coordinate the supply chain with endogenous retail price.

Coordinating a two-stage supply chain via a markdown money and advertising subsidy contract

This paper explores coordination of a supply chain consisting of one manufacturer and one retailer and studies Pareto condition of coordination mechanism under additive and multiplicative demand uncertainties where the retailer jointly determines order quantity and advertising level. We develop a markdown-money and advertising-subsidy mechanism to coordinate the supply chain in each case of uncertainty. Under a uniform distribution, a higher chargeback rate is along with a higher fraction of advertising expenditure shared by the manufacturer and the coordination mechanism is robust to error form. In the coordinated setting, whether salvage value influences the advertising level depends on the error form. Higher advertising elasticity or scaling constant implies a lower efficiency in each error case due to a higher mean demand, while the effect of the unit salvage value on the efficiency depends on the error form.

Markdown money contracts for perishable goods with clearance pricing

It is common in practice that retailers liquidate unsold perishable goods via clearance pricing. Markdown money is frequently used between manufacturers and retailers in such a supply chain setting. It is a form of rebate from a manufacturer to subsidize a retailer’s clearance pricing after the regular season. Two forms of markdown money are percent markdown money, in which the markdown money is limited to only a certain percentage of the retail price markdown, and quantity markdown money, which is essentially a buyback contract or returns policy with a rebate credit paid to the retailer for each unsold unit after the regular season. We show both forms of markdown money contracts can coordinate the supply chain and we discuss their strengths and limitations.

Strategic Customer Behavior, Commitment, and Supply Chain Performance

This paper studies the impact of strategic customer behavior on supply chain performance. We start with a newsvendor seller facing forward-looking customers. The seller initially charges a regular price but may salvage the leftover inventory at a lower salvage price after random demand is realized. Customers anticipate future sales and choose purchase timing to maximize their expected surplus. We characterize the rational expectations equilibrium, where we find that the seller's stocking level is lower than that in the classic model without strategic customers. We show that the seller's profit can be improved by promising either that quantities available will be limited (quantity commitment) or that prices will be kept high (price commitment). In most cases, both forms of commitment are not credible in a centralized supply chain with a single seller. However, decentralized supply chains can use contractual arrangements as indirect commitment devices to attain the desired outcomes with commitment. Decentralization has generally been associated with coordination problems, but we present the contrasting view that disparate interests within a supply chain can actually improve overall supply chain performance. In particular, with strategic customer behavior, we find that (i) a decentralized supply chain with a wholesale price contract may perform strictly better than a centralized supply chain; (ii) contracts widely studied in the supply chain coordination literature (e.g., markdown money, sales rebates, and buyback contracts) can serve as a commitment device as well as an incentive-coordinating device; and (iii) some of the above contracts cannot allocate profits arbitrarily between supply chain members because of strategic customer behavior.

Strategic Customer Behavior, Commitment, and Supply Chain Performance

This paper studies the impact of strategic customer behavior on supply chain performance. We start with a newsvendor seller facing forward-looking customers. The seller initially charges a regular price but may salvage the leftover inventory at a lower salvage price after random demand is realized. Customers anticipate future sales and choose purchase timing to maximize their expected surplus. We characterize the rational expectations (RE) equilibrium, where we find that the seller's stocking level is lower than that in the classic model without strategic customers. We show that the seller's profit can be improved by promising that: either quantities available will be limited (quantity commitment) or prices will be kept high (price commitment). In most cases, both forms of commitment are not credible in a centralized supply chain with a single seller. However, decentralized supply chains can use contractual arrangements as indirect commitment devices to attain the desired outcomes with commitment. While decentralization has generally been associated with coordination problems, we present the contrasting view that disparate interests within a supply chain can actually improve overall supply chain performance. In particular, with strategic customer behavior, we find that: (i) a decentralized supply chain with a wholesale price contract may perform strictly better than a centralized supply chain; (ii) contracts widely studied in the supply chain coordination literature (e.g., markdown money, sales rebates, and buyback contracts) can serve as a commitment device as well as an incentive-coordinating device; and (iii) some of the above contracts cannot allocate profits arbitrarily between supply chain members due to strategic customer behavior.

Supply-chain coordination with combined contract for a short-life-cycle product

A contract is a mechanism to realize the performance improvement of a supply-chain system or to achieve the perfect coordination of a supply-chain channel. This paper deals with the coordination issue of a selling channel for a short-life-cycle product. First, a new type of contract combining the return policy with markdown money according to the practice under which some companies sell their products with different marketing policies in different selling periods is designed. This case is illustrated using a stochastic dynamic-programming model. Then, the necessary condition to achieve channel coordination with this combined contract is derived; and given the scheme to allocate the coordination profit, the generalized method to find the optimal contract parameters is developed. Lastly, with analysis and simulations, it can be concluded that the supply-chain coordination with the single contract in literatures for two-period selling depends on the demand distribution and the cost structure of a system, but the combined contract that was designed depends only on the cost structure of a system. It can further be concluded that the combined contract can ensure channel coordination and arbitrarily allocate coordination profit, and that the combined contract is generalized with several classical contracts as its special examples. Furthermore, the supplier will become the active initiator of the combined contract under the high-risk setting because the combined contract can strengthen his status in the channel system and improve his performance.

Managing retail channel overstock: markdown money and return policies

This paper studies a manufacturer-retailer channel facing unknown demand. When the wholesale relationship comprises only a per-unit price that exceeds the manufacturing cost, the retailer’s inventory strategy will not properly reflect the channel’s overstock and understock costs. A number of researchers have advocated manufacturer return policies to remedy this misalignment of incentives, but none explain the reality that “markdown money” is sometimes paid to retailers expressly to avoid product returns. We formulate a model that distinguishes between these practices, and determine conditions under which each will be more desirable with respect to channel coordination and individual firm performance.