Journal
IEEE TRANSACTIONS ON SYSTEMS MAN CYBERNETICS-SYSTEMS
Volume 43, Issue 2, Pages 266-276Publisher
IEEE-INST ELECTRICAL ELECTRONICS ENGINEERS INC
DOI: 10.1109/TSMCA.2012.2204739
Keywords
Apparel supply chain; markdown money policy (MMP); mean-variance (MV) analysis; risk averse
Funding
- Research Grants Council of Hong Kong (RGC-HK) [PolyU 5420/10H]
- Hong Kong Polytechnic University [G-YJ23]
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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.
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