Price-only contracts with backup supply

Authors:
Xiaowei Xu;Yao Zhao
Affiliations:
Department of Supply Chain Management and Marketing Sciences, Rutgers University, The State University of New Jersey, Newark, New Jersey 07102, United States;Department of Supply Chain Management and Marketing Sciences, Rutgers University, The State University of New Jersey, Newark, New Jersey 07102, United States
Venue:
Operations Research Letters
Year:
2010

Citing 6
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Abstract

This paper studies a supply chain in which a manufacturer holds backup supply with extra cost to satisfy demand unmet by a retailer. We provide a simple threshold condition for when the manufacturer should hold backup supply. We also study how the backup supply affects the supply chain performance.