Promotional Strategies And Incentive Contracting Mechanism In Supply Chains

In a supply chain setting, promotions are critical in the channel due to complications with hooking up, manufacturers, retailers and consumers together. This dissertation aims to analyze supply chain promotions and contracts under collaboration between the operations and marketing disciplines. Borrowing from the marketing research on consumer’s slippage behavior, this research focuses on the efficient use of sales promotions like mail-in-rebate and retailer rebate. We examine the use of mail-in-rebate from the manufacturer’s perspective, under the effect of customers’heterogeneity and analyze strategies like limitation on coupons to be offered. Mail-in-rebate shows that manufacturer needs to clearly differentiate between rebate independent and partially rebate dependent customers. Furthermore, we define free rider scenario that quantifies the benefit/detriment of optimizing parameters in sequential game. We also analyze efficient rebate strategies which allow manufacturer to prefer mail-in-rebate or retailer rebate in a two-level supply chain. We show that retailer rebate provides better control over price setting than mail-in-rebate.Contractual arrangements are discussed for different real life supply chains in the regime of single period decision making. Two contracts are discussed from manufacturer’s perspective when he is facing information asymmetry. In a two level supply chain with newsvendor type setting, manufacturer only assumes a conjecture about demand mean and variance. On the other hand, the buyer has a private knowledge about demand shape. Part of this research emphasizes the point that even lack of information in a two level supply chain may not have a drastic effect on manufacturer’s profit. Instead he can stipulate a contract that is design-win and Pareto optimal as well. Such contracts have practical importance for single period high margin products which deny manufacturer to utilize his full capacity allocated for that product. We also discussed single period ordering patterns for newsboy when demand is uncertain or fuzzy in nature. These research results can provide useful insight to the operations managers as well as marketers to facilitate better promotional strategies and single period contracts. Further these results can be utilized as a springboard to explore wide range of future applications..