Effects of promotion cost sharing policy with the sales learning curve on supply chain coordination

Yu Chung Tsao, Gwo Ji Sheen

Research output: Contribution to journalArticlepeer-review

86 Scopus citations

Abstract

Promotional activity has become increasingly more common in the service industry. This research considers a two-echelon multiple-retailer distribution channel under retailers' promotional efforts and the sales learning curve. The competition between retailers arises from substitution effect due to shortages. This paper incorporates the idea of the sales learning curve into the promotion cost. The objective is to solve the retailers' promotion and replenishment decisions under retailer competition and promotional effort with the sales learning curve. The current study considers promotion cost sharing as a mechanism to achieve coordination. The model shows that keeping the fractions of promotion cost sharing within an appropriate range increases profits for all parties. This work also discusses how retailer competition and the sales learning curve affect channel decisions and profits. Concepts from retailer competition and the sales learning curve, along with numerical studies on a few interesting cases help deliver several important managerial insights. These results should be a useful reference for managerial decisions and administrations.

Original languageEnglish
Pages (from-to)1872-1878
Number of pages7
JournalComputers and Operations Research
Volume39
Issue number8
DOIs
StatePublished - Aug 2012

Keywords

  • Inventory
  • Promotion cost sharing
  • Promotional effort
  • Sales learning curve
  • Substitution effect

Fingerprint

Dive into the research topics of 'Effects of promotion cost sharing policy with the sales learning curve on supply chain coordination'. Together they form a unique fingerprint.

Cite this