We introduce and study the range contract, which allows a buyer to procure from a supplier at a prescribed price any amountwithin a specified range. In return, the supplier is compensated up front for thewidth of the rangewith a range fee. This fee canbe viewed as the buyer tradingmonetary value for reduceduncertainty. The range contract generalizes and unifiesmany common contracts, such as fix...

The problem of product assortment and inventory planning under customer-driven demand substitution is analyzed and a mathematical model for this problem is provided in this paper. Realistic issues in a retail context such as supplier selection, shelf space constraints, and poor quality procurement are also taken into account. The performance of three modified models, one that neglects customers...

In this paper, we propose a mathematical model in stochastic dynamic optimization form to determine the optimal strategy for an integrated single product inventory control problem and supplier selection problem where the demand and purchasing cost parameters are random. For each time period, by using the proposed model, we decide the optimal supplier and calculate the optimal product volume pur...

Reverse factoring—a financial arrangement where a corporation facilitates early payment of its trade credit obligations to suppliers—is increasingly popular in industry. Many firms use the scheme to induce their suppliers to grant them more lenient payment terms. By means of a periodic review base stock model that includes alternative sources of financing, we explore the following question: wha...

This paper studies an inventory policy for a retailer who orders his products from a supplier whose deliveries only partially satisfy the quality requirements. We model this situation by an infinite-horizon periodic-review model with binomial random yield and positive lead time. We propose an orderup-to policy based on approximating the inventory model with unreliable supplier by a model with a...

We model an isolated portion of a competitive supply chain as a M/M/1 make-tostock queue. The retailer carries finished goods inventory to service a Poisson demand process, and specifies a policy for replenishing his inventory from an upstream supplier. The supplier chooses the service rate, i.e., capacity, of his manufacturing facility, which behaves as a single-server queue with exponential s...

I n this paper we consider a cooperative, two-level supply chain consisting of a retailer and a supplier. As in many practical settings, the supply chain members progressively observe market signals that enable them to explain future demand. The demand itself evolves according to an auto-regressive time series. We examine three types of supply chain configurations. In the first setting, the ret...

S upply disruptions are all too common in supply chains. To mitigate delivery risk, buyers may either source from multiple suppliers or offer incentives to their preferred supplier to improve its process reliability. These incentives can be either direct (investment subsidy) or indirect (inflated order quantity). In this study, we present a series of models to highlight buyers’ and suppliers’ o...

Changes in cost sharing and remuneration system in the Netherlands in 2006 led to clear changes in financial incentives faced by both consumers and general practitioner (GPs). For privately insured consumers, cost sharing was abolished, whereas those socially insured never faced cost sharing. The separate remuneration systems for socially insured consumers (capitation) and privately insured con...

The focus of the present study is to examine whether supplier-induced demand exists for primary care physician services in Norway. We compare how two groups of physicians, with and without incentives to induce, respond to increased competition. Contract physicians receive their income from fee-for-item payments. They have an incentive to compensate for a lack of patients by inducing demand for ...