Ordering and pricing policies in a manufacturing and, distribution supply chain for fashion products

In the paper, we develop a model of manufacturing and distribution supply chains that are operating to meet price-sensitive random demand for products with short life cycles such as fashion products. Two specific scenarios are considered. The manufacturer-con trolled scenario is one where the distributor shares price-sensitive random demand with the manufacturer, and the manufacturer controls the supply chain stocking decisions and bears the risk of overstocking costs. The distributor-controlled. scenario works in the opposite direction. Prevailing wisdom suggests that the manufacturer should control supply chain decisions (e.g., via vendor-managed inventory). Our results indicate that such an arrangement is against the interest of a distributor selling short life-cycle products. Furthermore, we find that the total supply chain profit is generally higher when the distributor controls the supply chain stocking decisions and bears the risk of overstocking costs. (C) 2008 Elsevier B.V. All rights reserved.