Improving Supply Chain Performance and Managing Risk Under Weather-Related Demand Uncertainty

@article{Chen2010ImprovingSC,
  title={Improving Supply Chain Performance and Managing Risk Under Weather-Related Demand Uncertainty},
  author={Youhua (Frank) Chen and Candace A. Yano},
  journal={Manag. Sci.},
  year={2010},
  volume={56},
  pages={1380-1397}
}
We consider a manufacturer-retailer supply chain for a seasonal product whose demand is weather sensitive. The retailer orders from the manufacturer (supplier) prior to the selling season and then sells to the market. We examine how a manufacturer can structure a weather-linked rebate to improve his expected profit. The proposed class of rebate contracts offers several advantages over many other contract structures, including no required verification of leftover inventory and/or markdown… 

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