Mean-variance analysis of Quick Response Program

Quick Response Program (QRP) has been well established in fashion supply chains. It is known that QRP may not be equally good to all channel members and some measures have to be taken in order to achieve a win-win situation. However, little is known about the corresponding level of risk associated with QRP and some proposed measures. In light of this, we study QRP via a mean-variance (MV) approach. We illustrate how the measures such as price commitment policy, service-level commitment policy, and buy-back policy can be adjusted to achieve the MV win-win situation in which the channel members can be better off with considerations of both expected profit and risk. Numerical analyses are included and the analytical conditions for achieving both the supply chain channel coordination and the MV win-win situation are derived. Managerial insights are generated. (C) 2008 Elsevier B.V. All rights reserved.