Does a Manufacturer Benefit from Selling to a Better-Forecasting Retailer?

@article{Taylor2010DoesAM,
  title={Does a Manufacturer Benefit from Selling to a Better-Forecasting Retailer?},
  author={Terry A. Taylor and Wenqiang Xiao},
  journal={Management Science},
  year={2010},
  volume={56},
  pages={1584-1598}
}
T paper considers a manufacturer selling to a newsvendor retailer that possesses superior demand-forecast information. We show that the manufacturer’s expected profit is convex in the retailer’s forecasting accuracy: The manufacturer benefits from selling to a better-forecasting retailer if and only if the retailer is already a good forecaster. If the retailer has poor forecasting capabilities, then the manufacturer is hurt as the retailer’s forecasting capability improves. More generally, the… CONTINUE READING

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