Allan Ashley

Improving buyer-seller system cooperation through inventory control

Abstract Much of the literature pertaining to inventory control systems assumes a perfectly competitive market in which increases or decreases in the buyers purchase costs affect neither the final retail price nor consumer demand. This paper attempts to contribute results to the more recent literature characterized by the buyer-seller in a monopolistic market. The focus is on issues and advantages of improving buyer-seller cooperation in an inventory control system. Two inventory models are structured in a game framework. In the first model a noncooperative relationship (transaction) is assumed in which the seller, as the leader, makes the first decision and then the buyer, as the follower, makes its decision. The unique equilibrium of the game is obtained and found to coincide with the classical EOQ result. In the second model, the leader-follower relationship is relaxed and a scenario is examined in which the seller and the buyer cooperatively maximize their joint system profit. Comparison of the two models reveals that 1. (a) the total system profit is higher at cooperation than at noncooperation, 2. (b) the optimal order quantity of the buyer is higher at cooperation than at noncooperation, 3. (c) the wholesale price of the seller to the buyer is lower at cooperation than at noncooperation. It is also demonstrated that a quantity discount approach is an effective mechanism for achieving system cooperation.

Inventory, channel coordination and bargaining in a manufacturer-retailer system

Substantial research literature has been developed over the years on the subject of inventory. The more recent literature has examined the fundamental relationships between inventory control and price theory. A significant portion of this literature assumes the ultimate consumer demand as a constant and characterizes the relationship between a manufacturer and a retailer as a leader-follower problem. A primary assumption in these studies is that the manufacturer, as the leader, exerts almost complete control over the behavior of the retailer. However, in practice, the retailer does exert some control over the manufacturer. This paper develops a framework that integrates inventory control with constant demand and the economic relationship between consumer demand and retail price. Within this framework, the impact of order quantity, wholesale price and retail price on the behavior of both the manufacturer and the retailer is investigated. Furthermore, this paper explores the issues and conclusions that results from coordinating the relationship between the manufacturer and the retailer. Our analyses demonstrate that channel coordination can be achieved by utilizing well-known bargaining models. A numerical example is provided to illustrate our theoretical findings.

Manufacturer-Retailer Supply Chain Cooperation Through Franchising: A Chance Constrained Game Approach

Abstract In the literature of manufacturer-retailer supply chains, the focus of research is on a relationship in which a manufacturer is the leader and retailers are followers. This relationship implies a dominance of the manufacturer over retailers. Recent studies in marketing have shown a shift of retailing power from manufacturers to retailers. Retailers have equal or even greater power than a manufacturer when it comes to retailing. Based on this new market phenomenon, we intend to investigate a special manufacturer-retailer supply chain, i.e., the franchisor-franchisee supply chain. Utilizing chance constrained game theory, we explore the role of franchising efficiency with respect to transactions between a franchisor and a franchisee through fixed lump-sum fees, royalties, wholesale prices and retail prices. Two franchising game models are discussed. In a leader-follower non-cooperative game, the franchisor is assumed to be a leader who first specifies the fixed lump-sum fee, the royalty payment, and the wholesale price. The retailer, as a follower, then decides on the retail price. We then relax the assumption of the retailer’s inability to influence the manufacturer’s decisions and discuss a cooperative and partnership situation between the franchisor and the franchisee. The Nash (1950) bargaining model is utilized to implement profit sharing for the franchisor and the franchisee to achieve their cooperation.

Horizontal cooperative programmes and cooperative advertising

Horizontal inter-firm cooperation is an important form of cooperation between firms and has recently received increased attention from both researchers and professionals. This article examines advertising strategies involving horizontal cooperative programmes, and we focus on joint ventures and contractual alliances that characterise two prominent horizontal cooperative programmes. A modified Nerlove–Arrow model is employed to describe advertising efforts on goodwill and sales of products. Differential game theory is utilised to evaluate three cooperative scenarios. The scenarios include (i) no cooperative programme between two firms; (ii) the cooperative mode between the two firms is a joint venture; and (iii) the cooperative mode is a contractual alliance. The two firms’ optimal advertising levels and profits for their own brands as well as for the cooperative programmes are calculated and compared for different cooperative scenarios. For example, both firms show increases in their individual advertising levels when they are involved in a cooperative programme. Insight into the appropriate advertising, cost allocations and profit-sharing ratios are developed and analysed. It is demonstrated that cooperative programmes such as a joint venture or a contractual alliance are more profitable than non-cooperation. Using the model, analysis reveals that cooperation through a contractual alliance provides an opportunity to negotiate which of the two firms gets to control the advertising decisions for the cooperative programme’s product(s). Finally, it is noted that cooperation that utilises a contractual alliance occupies the dominant status for most of the profit-sharing patterns.

The Impact of Leadership Characteristics on Corporate Performance

We identify three attributes of a firm that exert significant positive impact on stock return performance of companies. Specifically, quality of management, financial soundness and quality of products/services indicators are critical for successful financial performance. We then discuss the leadership characteristics that are necessary to positively affect these attributes. We believe this information provides insights into the type of leadership characteristics that result in improved financial performance.

Coordination and performance analysis for a three-echelon supply chain with a revenue sharing contract

This paper focuses on a three-echelon supply chain composed of a manufacturer, a distributor and a retailer for a single selling period. Based on a revenue sharing contract, the coordination of the decentralised supply chain with the simultaneous move game or the leader–follower game is analysed. It is determined that the revenue sharing contract can coordinate the decentralised supply chain with the simultaneous move game. Our analysis reveals that the revenue sharing contract cannot coordinate the decentralised three-echelon supply chain with the leader–follower game except for a special situation. However, this result provides an opportunity to develop methodology and results that measure the potential improvement in supply chain performance that can be gained from utilising the revenue sharing contract. This is an important aspect of this paper.

Technology leverage and a sustainable society: a call for technology forecasting that anticipates innovation

We argue that economic value to society is created by converting input resources into valued outputs though the application of technology. To support this argument, the concept of technology leverage is introduced, and it is noted that the same input resource can be converted into different output values depending upon the technology employed in the conversion process and the state of technical innovation at the time the conversion occurs. This implies that through as yet unrealised innovations, future generations may create greater value for the same amount of resource than is currently possible. This difference has significant ramifications for current day resource allocation decisions. In addition to more conventional conservation arguments, technology leverage also recognises that the future value of retaining resources, especially non-renewable ones, may be evaluated using real option valuation techniques. These concepts are helpful in determining more comprehensive policies relating to resource allocation decisions.

An econometric analysis of ecological footprint determinants: implications for sustainability

Most research on the impact of income and other socioeconomic variables on the environment focuses on specific local environmental effects and not on the broader sustainability picture. We seek to fill the apparent gap in the literature, exploring whether and the extent to which income, economic openness, income inequality and the distribution of power influence sustainability. We employ ecological footprint data and from it derive a sustainability indicator, the ecological deficit. Using econometric analysis, we test the effects of our explanatory variables on the ecological deficit. While we find that economic openness appears to run counter to the goal of sustainability, the results for the other variables are more ambiguous and inconclusive.

Manipulation And Equilibrium Around Seasoned Equity Offerings

There exists a widely held belief that informed investors manipulate stock prices prior to seasoned equity offerings (SEO). Contrary to this assertion, a model is developed, which demonstrates there is significant evidence that informed investors not to manipulate trading prior to a SEO. Furthermore, there is an arguement that informed investors to trade the stock in the same direction indicated by their private information. In addition, the model is consistent with previous empirical evidence. Previous literature heavily relies on the Gerard and Nanda (1993) model. The model allows for more than one informed investors, whereas Gerard and Nanda de facto allows for only one. This model setting is not only more realistic to the real world, but also dramatically reverses its conclusion that there exists manipulative trading. It also indicated that following Securities and Exchange Commission (SEC) Rule 10b-21 and Rule 105, whose intention is to curb this manipulation, the SEO discount will change in either direction. Thus previous literature delineating methodology of utilizing the SEO discount change to test for the existence of manipulative trading is not well grounded. The model also predicts that undervalued firms tend to disclose more information in order to improve the stock price informativeness, whereas overvalued firms tend to do the contrary.

Vertical Cooperative Advertising in a Manufacturer–Retailer Supply Channel

Recent market structure reviews have shown a shift of retailing power from manufacturers to retailers. Retailers have equal or even greater power than a manufacturer when it comes to retailing. Based on this new market phenomenon, we intend to explore the role of vertical cooperative (co-op) advertising with respect to transactions between a manufacturer and a retailer. In this paper, we explore the role of vertical co-op advertising efficiency of transactions between a manufacturer and a retailer. We address the impact of brand name investments, local advertising, and sharing policy on co-op advertising programs in a manufacturer–retailer supply chain. Game theory concepts form the foundation for the analysis. We begin with the classical co-op advertising model where the manufacturer, as the leader, first specifies its strategy. The retailer, as the follower, then decides on its decision. We then relax the assumption of retailers inability to influence the manufacturers decisions and discuss full coordination between the manufacturer and the retailer on co-op advertising.