We investigate how supplier can use a quantity discount schedule to influence the stocking decisions of a downstream buyer that faces a single period of stochastic demand. In contrast to much of the work that has been done on single-period supply contracts, we assume that there are no interactions between the supplier and the buyer after demand information is revealed and that the buyer has better information about the distribution of demand than does the supplier. We characterize the structure of the optimal discount schedule for both all-unit and incremental discounts and show that the supplier can earn larger profits with an all-unit discount.

It has been well documented that buyers can benefit significantly from being able to place reactive orders in response to observed demand for a short life cycle product. In practice, suppliers often fill these reactive orders with less than total reliability. Although reactive order fulfillment can allow the supply chain to capture more of the demand that is realized, it can also deter retailers from ordering as much initially. In this chapter, we investigate how this trade-off affects the retailers’ ordering behavior as well as the profits of the manufacturer, the retailers, and the supply chain as a whole. We also develop insight as to how a manufacturer should offer a reactive ordering policy.

We investigate how a non-linear price schedule can be used to influence stocking decisions and supply chain performance in single period interactions between a supplier and buyer(s). In contrast to much of the work that has been done on single period supply contracts, we assume that there is no opportunity for ongoing interactions between the supplier and the buyers after demand information is revealed. Furthermore, we assume that there are either heterogeneous buyers that face different distributions of demand or that there is a single buyer that has better information about the distribution of demand than does the supplier.

A number of retail firms use a “private-label” strategy in which merchandise is sold under a brand name exclusive to the retail firm, but manufactured by one or more independent vendors. While offering a number of benefits, this approach also poses a different set of supply chain challenges than manufacturer-brand-based retailing, in that the retail firm must take a more active role in organizing and coordinating the planning and materials management activities in a supply base that is often dispersed and heterogenous.

We consider the combined problem of pricing and ordering for a perishable product with unknown demand distribution and censored demand observations resulting from lost sales, faced by a monopolistic retailer. We develop an adaptive pricing and ordering policy with the asymptotic property that the average realized profit per period converges with probability one to the optimal value under complete information on the distribution. The pricing mechanism is modeled as a multiarmed bandit problem, while the order quantity decision, made after the price level is established, is based on a stochastic approximation procedure with multiplicative updates.